Fears of huge property crash

Fears that the housing boom will end in tears were heightened today by new figures showing property prices are surging at their fastest pace since the height of the late-Eighties.

The figures from Nationwide, Britain's biggest building society, showed the average price of a home has leapt by 1.4 per cent over the past month to £113,665, pushing the yearon-year rate of increase to 24 per cent - the fastest since 1989.

In the late-Eighties low interest rates and the last days of double tax relief sparked a property frenzy. The Lawson boom was a forerunner of the early-Nineties property crash that left millions with negative equity.

Today's figures will fuel fears of a repeat, although most experts say low interest rates will continue to underpin the market. Despite October's increase, Nationwide said it had detected some early signs that the market was coming off the boil.

The society's group economist Alex Bannister said that the October rise was also the lowest month-on-month change since March. He expected further moderation in prices over the next 12 months.

He said the slowdown was under way in London, where first-time buyers were being priced out of the market and existing homeowners were unable to trade up.