North-South gap in house prices widens

A boom in house prices in London has opened up the widest gap between the capital and the rest of the country since at least the mid-1990s, a survey showed today.

The price of the average property in London recorded its biggest rise since the start of the decade, the Royal Institution of Chartered Surveyors said.

Sixty-nine per cent of London agents reported a rise in prices in June while none reported a fall. "The figures confirm the London market is undergoing a mini-boom," said Rics, which started collecting regional data in 1994.

"London has lagged behind since 2002, but a strong financial services sector has created a mini-boom, as the rest of the country takes a breather," said Ian Perry, a spokesman for the institute.

For the UK as a whole, the balance of surveyors reporting a rise in prices rose to 28 per cent in June, up from 21 per cent in May and the largest number for two years.

It said the World Cup had had little impact on buyer activity, with enquiries on the rise and newly agreed sales up for the second month in a row.

Instead, prices were driven up by a slight fall in the amount of new property coming on the market, the first month that vendor instructions had not risen since last October.

Mr Perry said there was growing evidence of a widening North-South divide. "London has become a property kingdom created by finance," he said.

"A strong financial services sector has transformed London into a property-rich city state. Economic divisions used to be characterised by unemployment and economic decline but are now characterised by the difference in house prices."