House price rises drive buyers out to new hot spots

Areas considered untouchable by many a few years ago are now seeing huge interest from first-time buyers and young professionals, according to estate agents.

Jenny Basham, head of marketing at Winkworth, said: "Tottenham is the big new hot spot. We have also just opened an office in West Norwood. These sorts of areas, once seen as undesirable, are now attracting people in their droves."

Other less than chic areas tipped to do well include parts of Barking.

The news comes as most property experts predict the London market will slow during the rest of the year after a red hot 18 months. However, there are no signs of a major slump yet, with government figures showing prices in the capital up 19.1 per cent in the year to July.

At the very top end of the market the global financial turmoil and stock market downturn has not yet affected property, according to agents.

Peter Rollings, managing director of Marsh & Parsons, said: "We sold a house in Hereford Road, Notting Hill, a few days ago for the asking price of £3.95 million after 66 viewings in just 72 hours. That really surprised us for the end of August."

Despite successive interest rate rises, few owners are in the position of having to sell in a hurry, which makes them reluctant to drop asking prices. Andrew Weir, director of the Foxtons branch in central London, said: "The problem at the top end is that it is very difficult to get people to part with their properties."

With inflation now back below the Government's two per cent target there is also growing confidence that interest rates have peaked at 5.75 per cent. However there is some concern that banks could be concealing exposure to the US sub-prime mortgage crisis.

One survey, by Primelocation.com, found that prices in central London fell by 1.4 per cent last month.

While prices are still 26.9 per cent higher than last August, this is a lower annual increase that July's 30 per cent and June's 31.8 per cent.

The biggest single fall was in Chelsea, followed by Holland Park and Notting Hill. However Mayfair, which had been lagging behind the more westerly areas, bucked the trend with a 7.8 per cent increase.

Primelocation Chief Executive Ian Springett said: "We'll be watching closely to see what happens to City employment levels as, together with overseas interest, the level of employment, salaries and bonuses generally sets the scene for the volume of activity at the top end of the market.

"A continued slowdown is looking increasingly likely over the coming months."