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EDITIONS
 Monday, 23 December, 2002, 08:16 GMT
House prices show North-South divide
15a Kensington Gardens, London
Sharp falls have hit the top end of the London market
UK house prices rose by just 0.1% in December, the lowest rise in more than a year, according to figures.

Property web site Hometrack suggested the slowdown had been driven by falling prices in London and the south east of England, but said the price boom was continuing elsewhere in the country.

Hometrack's figures have suggested a fall in the rate of house price growth for the past seven months, after peaking with a rise of 2% in May.

At the top end of the market, price falls have already started

John Wriglesworth, Hometrack

A raft of other surveys in recent weeks have also suggested that the surging prices of previous months could now be leaving room for more moderate increases next year.

North-south divide

Hometrack figures suggest central London house prices have fallen by 0.3% in December, and by 0.1% in Berkshire, south west London and west London.

"At the top end of the market, price falls have already started, due mainly to fear of unemployment spurred by the recent spate of City-based job losses," said John Wriglesworth, Hometrack's housing economist.

However, there have been significant rises in other areas.

Prices rose by 0.6% in Devon, 0.5% in County Durham and 0.4% in North and East Yorkshire.

Hometrack suggested the regional variations would continue into next year, estimating a 4% rise in UK house prices for the year but a 5% fall in London prices.

There is no question that the housing market has been slowing down over the course of the last six months, and this trend is likely to continue into next year

John Wriglesworth

"There will be a significant North-South divide next year, with the North buoyant and active and the South East slowing and stagnating," said Mr Wriglesworth.

Falling trend

Hometrack's findings confirm recent suggestions from mortgage lenders, house builders and surveyors that the runaway prices are coming to an end.

Last week, the Royal Institution of Chartered Surveyors (RICS) suggested house price inflation had slowed in November for the third month in a row, while house builder Persimmon said prices for new homes had been slowing for the past few months.

However, the Nationwide suggested house prices would continue to rise by about 10% next year, although there were likely to be regional variations.

Hometrack said house buyers were continuing to pay less than the asking price, with the average price paid in December falling for the sixth month in a row.

Home owners received an average of 95.9% of the asking price in December, compared with 97.7% in June.

"There is no question that the housing market has been slowing down over the course of the last six months, and this trend is likely to continue into next year," said Mr Wriglesworth.


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