The biggest boom since the Eighties

A nation-wide spending spree is under way, according to figures yesterday which showed record car sales, a widespread boom in house prices rippling out from London to the regions, and a surge in imports of cars and other consumer goods.

Share windfalls, resulting from building societies converting to banks, are fuelling the biggest consumer boom since the late 1980s, despite the recent interest rate rises. Car sales, house-price inflation and growth in retail sales have all returned to their highest levels for nearly a decade.

Sales of new cars in this year's R-registration bonanza are likely to break the previous record for the key month of August by 20,000, according to industry figures. The daily sales statistics, collected by the Society of Motor Manufacturers and Traders, showed a 16.5 per cent jump in total sales of R-registration cars in the first 20 days of August, to 382,000.

The figures are better than even the most optimistic forecasts by car companies and dealers, and suggest sales for the whole of the month will reach 520,000, easily beating the previous August peak of 500,112 during the last boom in 1989.

But the August registration figures are also likely to show another rise in the proportion of imported cars.

In the first seven months of 1997 imports accounted for two-thirds of UK registrations, up from 60 per cent the year before.

The turnaround is reflected in the alarming slide in Ford's market share to 16 per cent, down from almost 22 per cent in 1995. Private buyers are increasingly opting for imported makes such as Renault, Fiat and Volkswagen.

This August was only the second time that registrations have topped the half-a-million mark in the month. Private buyers, who were notoriously cautious last year about committing themselves to "big ticket" purchases like cars, have flocked to spend their windfall bonuses from building society conversions and takeovers.

Trevor Finn, chief executive of Pendragon, the largest UK dealer chain, said: "The windfalls are one factor, but people's minds are generally more settled about the economic situation and job security has stabilised."

The picture of a national spending spree was fleshed out by the news that the North-east is at the forefront of a widespread rise in provincial house prices that is beginning to show similarities to the housing boom of nine years ago.

Prices in the Hartlepool constituency of Peter Mandelson, the minister without portfolio, are now rising faster than those in London, according to official Land Registry figures. A Nationwide survey of house prices out tomorrow will support the finding that other areas of the country are starting to mirror the London trend.

The Land Registry survey showed that in England and Wales as a whole, prices rose by 8.9 per cent from the period of April to June 1996 to the corresponding period this year.

By comparison, the average increase in prices in Greater London was 12.8 per cent, with the average price up from pounds 100,946 to pounds 113,858.

Hartlepool prices went up by 17.9 per cent in the year, more than any other area except Buckinghamshire, where prices increased by 25.3 per cent, and Staffordshire, where there was a 18.9 per cent increase. Alan Lakey, senior manager of Hartlepool estate agents, Manners & Harrison, said: "The more times people talk about Hartlepool the better for the town. It's quite an exciting place."

The Blair effect helped lift Islington prices from an average pounds 121,407 to pounds 149,905 (up 23.4 per cent). But the once-impoverished London borough of Tower Hamlets was revealed as the newly-fashionable quartier of the capital, with prices rising from an average pounds 81,725 to pounds 104,842 (up 28.2 per cent).

Other figures yesterday showed that Britain's deficit in trade with the rest of the world climbed to nearly pounds 1bn in June - the month the Halifax floated on the Stock Exchange - due mainly to a rapid increase in imports of consumer goods.

Exports defy sterling, page 16

House price rises

Average house prices for England and Wales comparing April-June 1997 with the same period in 1996:

Type Average Price % rise

1996 1997

Dt'ched pounds 106,005 pounds 114,806 8.3

Semi pounds 61,359 pounds 66,563 8.4

Terraced pounds 52,288 pounds 58,225 11.3

Flat pounds 63,469 pounds 70,747 11.4

Source: Land Registry