UK house prices jump

May 31, 2001
Web posted at: 1017 GMT

LONDON (CNN) -- UK house prices have risen by an average of 50 percent under the Labour government, the biggest increase since the early 1980s.

The average price of a house in the UK is now £87,267 ($124,500), the mortgage-lending Nationwide Building Society said, compared with £58,196 when Labour came to power in May 1997.

Nationwide said house prices rose by 0.8 percent in the last full month of the Labour government, bringing the annual increase in May to 7.7 percent from 6.6 percent in April.

The rise in house prices in the four years of Labour rule is in contrast to an increase of only 12 percent during the last Conservative government of John Major, and may increase the feel-good factor among UK voters ahead of the June 7 election.

The housing market has been boosted by three quarter-point interest rate cuts this year by the Bank of England, making home loans cheaper.

"Accompanying this buoyancy, the number of mortgages approved for house purchase was 20 percent higher in the first quarter of the year, when compared to the first quarter of 2000," the Nationwide said.

With UK incomes rising and interest rates falling, the Nationwide said it maintained its forecast of a 7 percent rise in house prices for the whole of 2001.

The Nationwide said Britons now have £1.4 trillion of wealth tied up in their homes, an increase of £520 billion since 1997.

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