House prices 'rising at fastest rate since 1973

House prices are increasing at their fastest rate since 1973, although flats are soaring ahead of more expensive properties, according to a new survey.

Prices rose by 2.7% during the last month, lifting the annual rate of growth to 23.3%, said property website Rightmove. However, prices of flats leapt by 4.7% during the same period and are up 27.4% over the year.

The annual growth rate of 23.3% is the fastest in real terms for 29 years, says Rightmove. Adjusted for inflation - at present running at around 2% - prices are rising in real terms by 21% annually. This is higher than the bumper rate of 19.7% in 1988, when the abolition of double tax relief by former chancellor Nigel Lawson led to a rush to buy.

The latest figures come as Luqman Arnold, Abbey National's new chief executive, warned that the housing market is in danger of overheating.

"In Britain things are toppy, we look set for a correction," said Mr Arnold.

"Without inflation pushing up prices, consumers will view what they can afford in a different way.

"There are dangers, although I do not want to use the word 'crash'."

Rightmove, which claims to offer the most up to date picture of property values and whose site displays details of almost a third of all homes for sale, said the overall picture is one of cheaper properties and regions catching up with that that are more expensive.

While the cost of flats is rocketing, prices of detached homes are continuing to stagnate, rising by just 0.3% since this time last month and up 14.7% since October last year.

The traditional north-south divide is operating in reverse, with the northern half of the country seeing prices rise twice as fast as the south during the past few months.

In 1973, house prices rose in real terms by 24.7%.

At that time, the average price of a property was £9,942, compared with £155,467 today. The 1973 price equates to £81,226 at today's values.

"Overall, the market has remained quite sound but it is not a uniform story across the country, with parts of the London market seeing a clear slowdown and other regions continuing to grow," said Miles Shipside of Rightmove.

In London, the most expensive boroughs such as Westminster and Hammersmith &Fulham have seen prices drop, while properties in cheaper areas such as Lewisham, Newham and Tower Hamlets have surged by more than 30% in the past year.