South-east house prices `at boiling point'

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The Independent Online
Generous bonuses paid to workers in the City are contributing to a north-south gulf in the housing market with property prices in the South-east said to be at "boiling point".

A survey of the housing market carried out by the Royal Institution of Chartered Surveyors found buyers in the South-east were responding "with abandon" to shortages in supply.

As a consequence, 82 per cent of chartered surveyors in the South-east reported that house prices had increased over the three months to the end of February. The demand for property in the region has brought down the average time for a house sale to 11 weeks, compared with 13 weeks nationally.

Estate agents say they have too few properties to offer, with the average number of dwellings per agent down to 42, a 10-per-cent fall on this time last year. One agent in Ashtead, Surrey, said the property shortage was the worst he had known in 30 years. Chartered surveyors in the North reported far less activity. Only one-quarter said prices had increased in the three- month period.

Ian Perry, RICS housing spokesman, said the upward trend of prices in the South-east would spread north but was held up by the caution being exercised by northern buyers.

"Parts of the Midlands and North are not seeing the same demand or activity but eventually the current resurgence will become more uniform," he said. Country houses and three-bedroom houses are in great demand in all parts of the country but flats and bungalows are still the most difficult properties to sell.

RICS said the re-emergence of large bonuses in the City, on a scale not seen since the Eighties, was inflating prices in the South-east. Tony Copping Joyce, a central London estate agent, said: "The economy from my point of view is a fizzing and buzzing City, and it is generating an awful lot of cash.

"There are a lot of people who, during five years of stagnation, have been waiting to go out and buy. There is great pressure on property."

Prices in fashionable London districts, such as Islington and Camden, and in sought-after suburbs, such as Twickenham and Totteridge, are rising faster than in poorer areas, like Walthamstow and Leytonstone.

Copping Joyce, the RICS southern area housing spokesman, said the north- south divide extended as far as Birmingham but did not include the South- west, where prices were not rising.

Some northern estate agents said the picture was more complicated than the one painted by the RICS. They said the divide was between London and the provinces rather than the North and the South.

Others agreed that northern buyers were being far more parsimonious than their southern counterparts.

Helen Smelt-Webb, of Lewthwaite Barclay estate agents, near York, said: "Certainly we have not had any price rises and people are striking hard bargains.

"People are much more prepared to walk away rather than get into a `best- and-final-offer' situation with other buyers. They are saying `We are not going to be pushed up.'"

She added: "People in the North lost less money in the 1988 boom. They have no reason to be any more cautious than the southerners."