A house price boom in London and the South East has widened the north/south divide, according to the latest UK housing market survey by the Royal Institution of Chartered Surveyors (RICS).
RICS Housing spokesperson, Ian Perry said: "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."
* House prices rising strongly in London and South East but mostly moderate gains elsewhere
* Buyer enquiries rose through June despite distraction of the World Cup
* Surveyors express some concerns over possible interest rate rise but confidence in the housing market outlook is firm
House prices rose firmly in June, up at the fastest pace in just over two years. Buoyancy in house prices has been strongly influenced by a mini-boom in London and the South East of England, which have recorded the sharpest rises in 6 and 4 years respectively. House price gains in London have occurred despite the turbulence of the financial markets in May and June. The picture elsewhere in the country though is more subdued with prices up moderately in Northern England, South West, Scotland and the West Midlands and virtually flat in Wales, East Midland and East Anglia.
New buyer enquiries continued to rise across the country in June, supported by low interest rates and rising employment. Employment rose by over 200,000 in the year to May, well above the long-run average. The World Cup had little significant impact on would-be buyer activity with enquiries rising once again and newly agreed sales also up firmly for a second consecutive month. Completed property sales for the past 12 months were up by 17.9% in June which compares with a rise of only 8.1% last December. The amount of new property coming on to the market slipped back slightly in June, representing the first month that vendor instructions have not risen since last October.
As sales activity is still rising, the stalling of instructions has contributed to a renewed fall back in available
property on the market for sale. Rising unemployment has led to increasing financial pressure on some households since the turn of the year, but consumer surveys indicate that household finances are improving despite rising oil prices. Given a combination of rising buyer enquiries and a drop in available property on the market, it is not surprising that surveyor confidence has jumped again. Surveyors view the outlook for house prices as the best since March 2004, with confidence rising across the country. Optimism is also upbeat for sales prospects on the back of robust rises in employment levels. This is despite the fact that surveyors have expressed concerns over the market impact of a possible interest rate rise later this year.
