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London dictates house prices
House prices increased with 0.4% within October in London.
The latest survey from Hometrack reveals that this year the growth of prices for houses was the highest in two years time. Due to the annual increase of prices which was of 4.9%, an average house in UK costs now approximately £168,600.
But the engine of this constant house price rise is in fact the Capital of England which is dealing with an imbalance between the demand and the supply. Because of this, the year was marked with a 9.9% increase of the prices and October only recorded a rise of 0.9%.
Even so, there are strong clues which permit us to believe that the trend of the market is going to slow down. For example, the average time needed in order for a property to be sold is somewhere around 3 - 4 weeks and these figures were registered three months ago also. Further more, the proportion of the house price rising has been decreasing lately and specialists warn that the population has to be realistic with respect to the future prices growth.
Hometrack's Director of Research, Richard Donnell is of the opinion that "A flood of potentially over-priced properties coming to the market would certainly put an end to the recent level of price rises."
More over, the situation outside London is extremely different. The strongest price rises in the country were just a little bit over half of the level of London. Therefore, the South East registered a rise of 0.5%, while South East reached only the level of 0.2%. In other regions such as North West, Wales, West Midlands, Yorkshire and lots of others, the rise was almost inexistent, recorded at only 0.1%.
Richard Donnell explains the phenomenon: "Pricing levels are going through a prolonged period of re-adjustment in the wake of strong growth which took place between 2000 and 2004.” He also added that "Judging by how long it took the London market to adjust between 2001 and 2005 this is a trend that may well last into 2007.”
In the predictions of the representative of Hometrack, the year is most likely to end with a 5% average growth of the house prices and about 12% growth for London.
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