Boom in North and slowdown in South narrows house gap

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The Independent Online

House prices in parts of northern England rose at their fastest pace for eight years last month, narrowing the North-South divide in the property market, figures released yesterday suggested.

Almost all the surveyors questioned in Yorkshire and Humberside – 96 per cent – said prices had risen in March, the highest level of optimism since 1994, the Royal Institution of Chartered Surveyors said.

The picture was mirrored in the far North of England, which includes Tyneside and Cumbria, where agents reported the largest price rises since the Rics survey began eight years ago. There was, though, a slowdown in London and the South-east where stratospheric price rises over the past few years have put property beyond the reach of most first-time buyers.

Across England and Wales prices rose at their fastest rate since January 2000, as a shortage of homes for sale forced the growing number of buyers into price auctions. The number of sales being processed by each surveyor hit its highest level since 1989, while the number of properties for sale was the lowest for two years.

The survey provides the latest evidence that homebuyers have brushed aside fears of recession to plunge into the housing market. According to Halifax bank, the biggest mortgage lender, house price inflation is running at levels not seen since the 1980s boom.

Ian Perry, Rics' national housing spokesman, said: "The housing market is busy right across the country with no end in sight to rising prices, despite many predictions that the bubble is about to burst.

"Price rises are definitely being supported by the shortage of suitable properties for sale in all parts of the country, even though traditionally this is the busiest time of the year."

London and the South-east now have the lowest number of surveyors reporting rising prices, which Rics believed was probably an effect of higher overall prices and concerns at possible interest rate rises given the high level of debt taken on by Londoners and hikes in stamp duty.

"In London and the South-east high prices are beginning to have an impact as affordability becomes an issue," Mr Perry said. "This may be reflected in other regions in the coming months."

The possible narrowing of the North-South divide was highlighted in surveyors' reports to Rics. Edward Watson in Newcastle upon Tyne said there had been a "surge in values, caused by limited houses on the market, confident purchasers, and interest rates at the lowest for a generation".

Ian Briggs in Ilkley, West Yorkshire, said the market had reached fever pitch. "The majority of properties in popular price ranges are going to sealed bids and usually attracting 10 or more offers," he said.

Dion St John Beard in Chelsea, west London, said: "Buyers are wary of over paying – still offers made, but lower than the guide price."

In the coming months chartered surveyors expect price rises to continue, with the proportion of surveyors expecting rises against those expecting prices to fall at 71 per cent – exactly the same level as the month before.

The downturn in stocks had happened even with the traditional spring upturn in new instructions, as sales had continued to strengthen, Rics said. The proportion of sales to property on offer increased to 56 per cent, up from 41 per cent a year earlier and above the long-term average of 36 per cent.