The UK's house price inflation

Q2 7.7% (National Rate) Q1 3.1% (National Rate) Q2 4.1% (Quarterly rate) Q1 1.1% (Quarterly Rate)

A semi-detached house in Greater London is almost five times as much as in South Humberside.

The annual rate of property price inflation rose to 7.7% in the second quarter, up from 3.1% in the first three months of the year.

And strong growth is predicted for the rest of the year by Halifax, which compiled the data.

The cost of an average semi

"The recent series of mortgage rate cuts, supported by the continuing decline in unemployment and the healthy state of the household sector's finances, has stimulated the renewed buoyancy in house prices," said Martin Ellis, Group Economist at the Halifax.

Slower economic growth should constrain the market and is expected to cause house price inflation to ease over the coming months

Martin Ellis

The highest level of inflation was in Greater London where prices increased by 7.1% during the second quarter - 17% on an annual basis.

This means that the average price of a semi in greater London is �235,400. In South Humberside it is �47,900, and it is �55,400 in Dyfed.

Northern Ireland's County Antrim and Norfolk were in the middle of the country's property price league, with the average price of a semi at �85,050.

Northern Ireland has also experienced rapid growth, with an annual property price inflation rate of 16.2%.

Squeezed out

London's property prices have grown much faster than wages, making it increasingly difficult for buyers to afford a house and the mortgage repayments.

First time buyers Q2 2001 change on Q2 2000

Wales 2.5% Scotland -0.6% N. Ireland 25.2% Greater London 18.2% North -1% UK 6.5%

The ratio of house prices to average earnings is above its historical average in Greater London, the South East and the South West, meaning that home buyers are feeling the pinch in spite of lower interest rates for mortgages.

"High house price to earnings ratio in southern England are likely to limit house price growth in this part of the country," said Mr Ellis.

The relationship between house prices and average earnings is broadly in line with its long term average at a national level.

The most favourable house price-to-earnings ratio is found in Wales, Scotland and northern England.

Industry trouble

The growing north/south divide in house prices represents the wider economic divide between the regions.

The robust service sector in London has helped it weather an economic slowdown better than other regions.

Halifax says that the prospect for the housing market is strong for the next six months, but slower economic growth should constrain house price inflation.