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News: RICS - boom drives record property gap

House price inflation in the UK is running at a two-year high as London and the south east experience another boom on the back of a strong financial services sector, the Royal Institution of Chartered Surveyors said today.

House prices rose in June despite continued rises in unemployment and volatile financial markets, with 28% more Chartered Surveyors reporting a rise than a fall compared to 21% in May.

London and the South East recorded the sharpest house price rises in six and a half and four years respectively. The gap between prices in London and the rest of the country is the largest ever recorded by RICS. London has lagged behind since 2002 but a strong financial services sector has created a mini-boom, as the rest of the country takes a breather.

Completed sales for the past 12 months were up by 17.9% in June, which compares with a rise of only 8.1% in December.

The amount of new property coming on to the market showed a slight drop in June, the first month that vendor instructions have not risen since last October. The fall of instructions has contributed to a renewed fall back in available properties, indicating a tightening of the market and rising consumer confidence in the economic climate.

RICS spokesman, Ian Perry, said: "A strong economic climate continues to encourage the housing market with rising unemployment doing little to discourage the consumer. Contrary to expectations, the World Cup and volatile financial markets have had little impact, a sign that the market remains healthy and consumer confidence is strong."

"Evidence suggests that the property market is once again seeing a north south divide. A strong financial services sector has transformed London into a property-rich ‘city state’. Economic divisions used to be characterised by unemployment and economic decline but are now characterised by the difference in house prices. London has become a property kingdom created by finance."

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