Property rage grows as house prices rocket

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The Independent Online
THE RISE in house prices in the second quarter of this year was the biggest since the height of the late-1980s boom, and cases of "property rage" are becoming more common as buyers fight over homes, according to a new report from Halifax.

The average price of properties sold was pounds 75,578, with a range from pounds 54,511 in Yorkshire up to pounds 120,242 in London where there is an "acute shortage" of certain types of family houses.

The boom in London was confirmed by the estate agency Knight Frank, which reported a rise of 13.5 per cent in central London residential property prices in the year to June, and up to 30 per cent in some areas.

Halifax said such hot spots contrasted to areas of subdued price rises in other parts of the UK, and predicted that the housing market would remain healthy, with annual increases in the 5-6 per cent range.

It commented: "We see no evidence to suggest that the market is returning to a 1980s-style boom," the report concluded.

However, with other reports bringing signs of rapid economic recovery, evidence that the housing market is revving up will dampen expectations of further cuts in interest rates. Remaining hopes for another reduction in loan costs will rest on inflation figures today turning out to be even better than expected.

Official figures yesterday hinted at potential future cost pressures in industry from rising oil prices. A 30 per cent surge in the price of crude oil over the 12 months, and 3.4 per cent during the month, took input prices paid by manufacturers up 0.6 per cent in June. Their year- on-year change, at minus 1 per cent, was the least negative in more than three years.

"Core" output prices charged edged up 0.1 per cent in June and were still 0.5 per cent lower than a year earlier, however. This suggested manufacturers were unable to pass on their cost increases, analysts said, and were likely to continue to cut other costs by shedding jobs.

But outside industry, there were signs of a rapidly improving pace of activity. In its monthly survey, the British Retail Consortium (BRC) said high street sales had improved again in June.

The value of total sales was up 4.5 per cent in the year to June, recovering from 2.4 per cent in May and a decline the previous month.

The BRC's comments were downbeat, as many retailers had begun their summer sales earlier than usual. Andrew Higginson, chairman of its economics committee, said: "One month's results need to be treated with caution. The underlying picture remains much the same and there is no danger of overheating."

The best performing sectors last month were footwear, children's clothes and - tying in with the upbeat housing market - DIY goods. The weather caught out the clothes shops. After a dismal start to the summer, they had already marked down the prices of seasonal stock by the time the sun started to shine.

Business also picked up in financial services, according to a separate Confederation of British Industry survey. The volume of business and profits climbed at their fastest rate since the end of 1996, and optimism increased for the third quarter running.