House prices up by nearly 19%

HOUSE prices across the country have risen almost 19% in a year, putting paid to fears of an imminent crash, new figures from the Halifax reveal.

The day after the Bank of England decided to freeze interest rates at a historically low level, a detailed report found that prices in the north are increasing at around three times the rate of ones in the south.

Britain's biggest mortgage lender said annual house price inflation was running at 38% in the North during the third quarter of the year, while in Yorkshire and the Humber and Wales the cost of property was 32% higher than it had been a year ago.

In Greater London prices have increased by 8.6% during the past year, while the cost of homes in the South East and South West are just 12% higher and prices in East Anglia have risen by 16%. The average price of a home in the capital is now £223,460 - 67% above the UK average, compared with an average of 48% during the past 20 years.

Halifax added that all of the UK's top 10 property hotspots for the past year were outside the south. Widnes in Cheshire led the way with house prices there rising by 68%, while in Barry in South Wales they were up 59%, in St Helens they gained 55% and in Swansea they were up by 53%.

The Isle of Wight tops the list with a 13% increase, followed by East Sussex with a rise of 10%. West Sussex is next with nine% and Oxfordshire and Surrey did well with 7% rises.

But in Bedfordshire prices are just 2% higher than a year ago. In Essex they are 1% higher and in Buckinghamshire prices are actually down by 3%.

Julian Roberts of the Halifax said: 'There has been increasing confidence in the market as interest rates remain the lowest for 50 years. Combined with high levels of employment they continue to support housing demand.'

While talk of a price crash has receded, however, most housing analysts continue to predict a cooling of the market. Mr Roberts said he was concerned that the high house prices in London continued to deter first-time buyers.

He said: 'The only natural brake on house price inflation in the London area is the problem of first-time buyers unable to get on the property ladder. This will continue to be a strong factor in limiting house price growth next year.'

But Andy Stuart, editor of Your Mortgage magazine, said he believed a price crash would still happen - next year. He said all buyers felt jittery because of concerns about future mortgage rate increases and high prices.

'We predict that London prices will fall sharply next year before rising again - but not before 2006,' he said.