House prices hit £200,000

The house market boom has pushed the average cost of a London home through the £200,000 barrier for the first time.

The figure for Greater London compares to the national average
which now stands at £116,801. A record-breaking 24 per cent rise in property prices for the year has been fuelled by cheap mortgages and low unemployment.

The proportion of earnings a first-time buyer is paying towards their mortgage is now 15 per cent, the lowest for almost 20 years. Despite predictions of a sharp slowdown or even collapse in the market, there is no sign of Britain's property boom coming to an end, according to figures today from Britain's biggest mortgage lender, the Halifax.

"The UK housing market remains very strong with house prices
increasing at a record pace in September," said Halifax group economist Martin Ellis. Although the London property market has slowed down this year, it is still growing at a double-digit annual rate.

Halifax said it had been caught out by the pace of the rises and has upgraded its forecasts for the year as a whole to the 24 per cent mark.

Although the increase will delight home owners, it will raise fresh fears about the affordability of property in London and the South-East for key workers such as teachers and nurses.

The figures reveal that the average house in Britain rose in value by 4.3 per cent in September - equalling the all-time monthly record. All regions of the country apart from Scotland and Northern Ireland have seen double-digit growth over the past 12 months.

The fastest growth was seen in the East Midlands with a 38 per cent annual rise.

Another factor behind the boom is that homebuyers believe that there is little chance of a rise in interest rates in the forseeable future, giving them more confidence to wade into the property market. A shortage of property is also helping to drive up prices, Halifax said.

The lender is predicting that the market will "slow gradually" over the next 12 months.

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