Property prices in London hit an all-time record

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The Independent Online

Prices of homes in London's most desirable postcodes have hit an all-time high while approvals for mortgages have recorded another sharp increase, according to the latest figures to point to a robust housing market.

The value of properties in areas such as Chelsea and Hampstead hit an average of £930,000 this month, a property website said today.

Primelocation said all regions of its "prime" London market had exceeded £500,000 for the first time.

The report will add to speculation that London is set for a price boom on the back of a bumper year of bankers' bonuses.

Ian Springett, Primelocation's chief executive, said: "London tends to be the pace-setter for the rest of the UK and particularly at the top end of the market. Competition to secure the right property is fierce due to favourable domestic conditions and continued interest from overseas."

Overall the average price in prime areas recorded an annual rise of 4 per cent on the back of a 12 per cent surge in the capital's leafy western suburbs such as Wimbledon.

The report followed figures yesterday from the Building Societies Association showing the value of mortgage approvals by its members in January hit a two-year high of £4.3bn.

Approvals, which are loans agreed but not yet made, tend to herald the movement in prices two months ahead because of the delay between approval and purchase.

Adrian Coles, the BSA's director general, said: "This confirms other evidence that there has been a slight rally in the housing market."

However the British Bankers' Association said underlying mortgage lending rose £4.6bn in January, down from a strong £5.3bn in December.

Howard Archer, chief UK economist at Global Insight, said: "The data indicates that the marked overall improvement in housing market activity evident in the second half of 2005 has been extended into 2006."

Meanwhile hopes of a cut in interest rates faded further yesterday after Kate Barker, a member of the Bank of England's Monetary Policy Committee, said the MPC had been encouraged by recent activity in the consumer sector.

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