15% house price surge

House prices in London have gone up 5.7 per cent since April and 15.8 in the past year, new figures reveal today.

The Halifax is the second mortgage lender this week to record massive price rises and an average London house price of almost £200,000. It also confirms that house prices in London have doubled in five years.

However, a 1988-style crash is most unlikely. In 1990 the average home buyer in London spent more than 40 per cent of gross annual income on mortgage repayments, but that figure is now only 18 per cent.

The latest figures confirm the Nationwide's findings that prices rose by 14.8 per cent in London the past year.

House prices are rising fastest in Redbridge, where they went up 41 per cent in 12 months. Second fastest was Merton (35 per cent).

At the other end of the scale, average prices in Southwark went up by only one per cent and in Lambeth by only three per cent.

The Halifax is concerned that house building in London is significantly below the level required over the next 20 years. It says this is a key factor behind the sharp rise in prices.

Halifax regional manager David Thompson said: "We expect house price growth to be slower during the second half of the year, in response to higher interest rates and mounting affordability difficulties for firsttime buyers."

However, he added: " Traditionally popular and expensive areas, such as Notting Hill and St John's Wood, continue to see strong house price growth, taking them out of the reach of more and more buyers. This has pushed up prices in more outlying areas."