Rising house prices defy slowdown

London's property market is showing renewed signs of life as house prices continue to rise across the country, Britain's biggest mortgage lender said today.

Figures from Halifax show that in stark contrast to anecdotal evidence of a slowdown, house prices rose nationally by 1.3 per cent last month - after a cooler 0.6 per cent jump in June.

In London, the mortgage lender is seeing more demand for homes in the £200,000 to £250,000 bracket, despite the large deposit needed. Halifax said first-time buyers in London now lay down an average of £40,095 to even get on to the property ladder. The average price of a Londoner's first home is a record £193,508.

Chief economist Martin Ellis said: "With mortgage rates at a 50-year low and affordability levels well below the long-term average, the housing market continues to be underpinned by strong fundamentals."

Today's figures come days after Nationwide shrugged aside talk of a housing crash and said it still believed house prices would jump by around 17.9 per cent this year.

Halifax said a chronic lack of new homes is helping to keep the housing market bubbling in London and the South-East and warned there could be a serious problem in the coming years if action is not taken.

Last year 170,000 new homes were built in Britain, the lowest level since 1949, and Halifax said there could be a shortfall of 500,000 homes in the South-East by 2021.

Halifax believes annual price inflation across the country is now 19.2 per cent, down from 22.7 in May, despite Britain's growing debt burden.

Across the country, new borrowers are spending an average of 14 per cent of their salary on mortgage payments, below the 22 per cent average for the past 20 years.

Prices paid by first-time buyers in London are now three times the sum paid in the North.