Among the five highest price rises in London in January, Hammersmith and Fulham house market have "some promising signs for the first quarter of this year", according to Hometrack latest report. The report was published before the Bank of England raised interest rates by 0.25% to 4%, increasing the cost of borrowing and affecting demand. This was the second interest rates raised in three months and economists expect more this year.

Hometrack's January survey of the London housing market reports a quiet start to the year in the Capital, with a 0.1% increase in the average price of London property, moving house prices up to £244,600. Apart from December, house price inflation in the capital has been positive for the past four months.

During January, 17 boroughs saw price rises, 13 boroughs saw static prices and only three boroughs saw falls in prices. The highest price rises during January were reported in Wandsworth (+1.0%), Redbridge (+0.7%), Barking and Dagenham (+0.6%), City of London (+0.6%) and Hammersmith and Fulham (+0.5%). The overall average price in the borough last month was of £319,400.

The report says that Hammersmith and Fulham has had "a fairly static market over the last year with the market only really starting to strengthen in the last quarter. There have now been some promising signs for the first quarter of this year."

Price falls were seen in Kingston upon Thames (-1.0%), Kensington and Chelsea (-0.3%), and Bromley (-0.1%). It is generally the more expensive boroughs that see price falls: the 10 boroughs with the highest house price rises have an average house price of £231,730 whereas the 10 boroughs with falling or stagnant prices have an average house price of £295,850.

The Capital is still seeing quiet conditions as the housing market picks up slowly post-Christmas. However, agents in many areas report that there has been a marked pick-up in activity since the New Year period.

Sales price as a percentage of asking price has recovered after last month's 0.1% dip (the first dip seen in eight months) and now stands at 93.6% (93.5% in the December survey). This level has not been exceeded in the past 12 months and further recovery should materialise in the coming months as the lead up to spring sees a surge in activity.

Whilst the number of buyers looking during January decreased, this decrease was less pronounced than the number of properties coming onto the market. Hometrack's index therefore continues to show a positive, excess demand for the sixth month in a row.

John Wriglesworth, Hometrack's housing economist, comments:
"Despite a seasonally quiet time of the year, London house prices continue to rise. The falls experienced in the middle of last year seem to be mostly over, with only three boroughs showing slight falls this month. Prospects of strong city bonuses, improving employment and sustained low interest rates are hoping the recovery. Lenders are now showing a willingness to lend more against household incomes. All this implies no prospect of overall average London house price falls for the foreseeable future."

Hometrack Web site