THE property market is gathering pace, with London taking the lead, according to a new and more reliable price index launched yesterday by the Land Registry.

Figures from the government agency show that average property prices have grown at their fastest rate since June last year. House prices rose by 1.3 per cent in September, bringing annual growth to 6.3 per cent.

The new index, which sets out to be more accurate than rival yardsticks, not only provides further evidence that London continues to outpace the rest of the country but also gives a more detailed picture of regional markets, some of which have experienced price falls.

Prices in the capital rose by 9.5 per cent over the year, followed by Yorkshire and the Humber with an increase of 7.2 per cent. House price increases were also strong in the South East (6.4 per cent), North West (6.9 per cent) and South West (6.3 per cent). The smallest rise was recorded in the North East, which saw an increase of only 1.9 per cent over the year after a price fall of 2 per cent in September.

House prices fell in Darlington (-2.5 per cent), Caerphilly (-2.1 per cent), Middlesbrough (-2.1 per cent) and Blackburn (-1.8 per cent).

The new independent House Price Index, which will be published monthly, measures house resales on a like-for-like basis, a method known as repeat sales regression. By comparing similar types of properties at county or London borough level rather than taking a crude average for the country, it aims to iron out confusing statistical blips.

Ted Beardsall, Land Registry deputy chief executive, said: “We believe that our new House Price Index will become the authoritative and most accurate reflection of average house price movements.”

The figures are based on Land Registry house price data, which include all property sales, unlike statistics from banks and building societies that report only transactions requiring a mortgage. With a growing number of properties bought by cash buyers with big City bonuses or the proceeds of a previous property sale, the new index could become essential reading for policymakers and commentators.

Nevertheless, as Land Registry figures are based on property sales completions rather than mortgage valuations, the publication of the new index will continue to lag behind data from the Nationwide and Halifax.

Some economists questioned whether the index would shed new light on our understanding of the housing market. Ed Stansfield, of Capital Economics, said: “The headline figures of 6.3 per cent is pretty comparable to those released by the Nationwide or Halifax. It is consistent with anecdotal evidence that suggests quite a wide variation in the property market around the country. Perhaps the biggest advantage of the new index, though, will be its provision of regional and sub-regional breakdown of house prices on a monthly basis.”

For more information go to: http://www.landregistry.gov.uk/houseprices/

LAND REGISTRY: PROPERTY MOVE

Detached homes remain the most expensive, at £256,754, despite seeing the lowest price growth during the year to September 2006

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