House prices 'distorted by London'

The unique local circumstances of London have a distorting effect on the overall UK house price figures, it has been stated.

Acadametrics, which compiles the Financial Times House Price Survey, said the annual figure for house price inflation in the UK for 2007, which stood at 7.9 per cent, was heavily influenced by the circumstances in the capital, where land for sale is costlier, along with the price of homes.

Chairman Peter Williams told the paper that without the peculiar international economic role London has the figure would be much lower, standing at 5.8 per cent if the London factor was discounted from the equation.

He said: "London is a global housing market and is completely outside the wages and inflation pressures in the UK."

The Financial Times survey found that prices rose by just 0.1 per cent in December 2007, compared with 0.2 per cent in November, the lowest rise since June 2005.

On its own it may indicate a flattening of the housing market, although other recent surveys have shown wide variation in trends, with Nationwide's December survey indicating a 0.5 per cent drop in prices, while Halifax recorded a 1.3 per cent increase.



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