Patrick Currie, CEO of Hometrack, says: 'There seems no sign of a tail off inLondon prices despite what is being said in some quarters. Competitiveinterest rates and low inflation have come at exactly the right time forwannabe homebuyers, and continue to drive forward the London propertymarket.'

Currie has attacked the recent Cambridge Econometrics report, which said thatLondon house prices were unsustainable, with the average price of a home inthe capital being almost five times the annual income of the household. Hesaid, 'Affordability is far better measured by the monthly cost of amortgage. In 1989 base interest rates were between 13.75% and 14.85% withinflation at 11%. Now we are enjoying rates of 5.5% and inflation of 1.8%.'East London is still the cheapest place to buy with an average propertycosting £155,863 ($218,200). Unsurprisingly properties were also selling fastest inthis part of the capital with three weeks being the average time to exchangecontracts.

Hometrack's findings have been supported by figures released by theRoyal Institution of Chartered Surveyors, which shows that housing stocks onchartered surveyors' books have dwindled to half those of 1995 levels. IanParry, RICS housing spokesman, says: 'Widespread speculation about economicmalaise and restrictions brought about by foot and mouth have failed to haveany significant impact in the Southeast.'