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News: Asking price mini-boom - but only in the south

Latest house price figures from property website Rightmove show the average asking property price for the 4 weeks through June 10th rising to £211,442 (£209,829) - a change of 0.8% on the month and 6.4% for the year. And in line with Rightmove's revised 2006 forecast announced last month, up from 5% to 8%.

 

June

May

Average property asking price

£211,442

£209,829

% change in month

+0.8%

+2.0% %

Change in past year

+6.4%

+5.9%

Monthly index (jan 2002=100)

172.0

170.7

However, Rightmove said the mini-boom in prices continues to be led by the south of the country. Indeed, falls in many of the northern regions of England have now changed this from a southern-led boom, to effectively a southern-only boom.

In June 2002, average prices in the South were double those in the north. The gap is now widening again, having reached a turning point last September when the average property was only 46% more expensive in the southern half of the country. The southern regions are now over 55% more expensive.

Miles Shipside, commercial director of Rightmove commented "The buoyancy of the southern economy and demand for quality property by affluent buyers are having the effect of increasing homeowners’ net worth even further."

"With hindsight, the best time to move from the north to the south and ‘bridge the gap’ was in September last year, when the difference was at a four year low of 46%. Parts of the north are now being left behind, as stretched affordability has limited sellers’ ability to increase prices in most regions"

Affordability seems to have reached its limits, and can only be improved by wage increases, a reduction in interest rates or a fall in real house prices. With the next move in rates anticipated to be upwards, housing activity in the regions further away from London could be hardest hit, said the report.

An upward movement in interest rates would come at a time when the pace of price rises is slowing due to seasonal factors, from 2% in May to 0.8% in June. This is a clear sign that the recent rate of increase is not sustainable, and will slow in the second half of 2006.

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