Property boom gathers pace

THE BOOM in UK property prices appears to be regaining momentum, according to figures from the Office of the Deputy Prime Minister.

House prices rose 9.7% to £163,645 in January compared with a year earlier, up from a year-on-year figure of 8.3% the month before.

However, while the gain represents a paper profit of £14,500 for the average homeowner in the past year, the Government's latest property study reveals first-time buyers, already struggling to get a foot on the ladder, are faced with a bigger boom at the lower end of the market.

The inflation rate for first-time buyers rocketed to 12.1% in January from 6% in December.

Last month, Halifax revealed the number of first-time buyers has collapsed from 526,000 in 2002 to only 355,000 in 2003 - the lowest since records began 30 years ago - and that first-timers represented only 29% of all buyers last year, compared with 38% in 2002 and 50% in 2001.

Nationwide has called on the Government to act on stamp duty, applicable on most properties of more than £60,000. It has warned that 98% of first-time buyers in London pay stamp duty compared with 43% 10 years ago.

The Government's study also revealed annual house price inflation in London, which had slipped in recent months, bounced back to 5.0% from 3.8% in December.

But the biggest gains were in North-East England (26.7%), the North-West (20%) and Scotland (23.3%).

Since the data was collated, the UK base rate has risen from 3.75% to 4%, pushing up variable mortgage rates. However, figures from the largest lenders suggest the rise has done little to quell the property boom.

A survey from Nationwide building society showed prices rising by 3.1% in February, the strongest monthly increase since April 2002.

Halifax's February figures showed house prices rose less strongly than in January, at 1.6% month-on-month compared with 2.3%. However, the year-on-year growth rate picked up to 17.8%, the highest since last September.