LONDON (AFX) - UK house prices rose 4.1 pct in the second quarter of 2001, the fastest increase since the third quarter of 1999, according to Halifax.
On an annual basis, house prices raced to 7.7 pct in the second quarter from 3.1 pct in the previous quarter.
The biggest quarterly rise in prices were recorded in Greater London, where prices rose 7.1 pct, followed by a 5.5 pct gain in the North West. The increase in London represents the sharpest since the last quarter of 1999.
Annual house price inflation in Greater London was at 17.0 pct in the second quarter compared with only 6.4 pct in the preceding quarter.
The North-South divide continues with prices growing substantially faster in the South compared with the Midlands, Northern England, Scotland and Wales.
Gains in London also widened the price gap with the national average. Prices in London were a good 87 pct above the national average in the second quarter.
Halifax group economist Martin Ellis said the recent series of mortgage rate cuts, supported by the continuing decline in unemployment and the healthy state of the household sector's finances has stimulated the renewed buoyancy in house prices.
"The prospects for the housing market over the second half of 2001 remain positive with prices set to continue rising. Slower economic growth should, however, constrain the market and is expected to cause house price inflation to ease over coming months. In addition, high house price to earnings ratios in southern England are likely to limit house price growth in this part of the country," he said.