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London house prices hit another record

London house prices hit another record

Category: Mortgages

Updated: 24/10/2013
First Published: 24/10/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

According to the latest Asking Price Index from Home.co.uk, London house prices have surpassed the £400,000 mark after another record year.

The UK capital's house price growth is being fuelled by a distinct drop in the supply of new properties coming to market with figures being down 31% on the same time last year, whilst over the longer term supply of property has fallen 78% since 2007.

But, it could also be down to the fact that the property crash didn't affect London all that much.

Home.co.uk's analysis reveals that house prices dipped slightly in the capital between 2007 and 2011, but it's now become clear that it was more of a short-term blip rather than the true crash the rest of the country suffered.

That means property prices already had a high starting point, and they only seem to be getting higher. They're now 15.3% higher than they were five years ago with prices having gone up a whopping 11.7% in the last year alone, bringing the average asking price of a London home to a record £400,096.

This means London properties are now 63% higher than the average price of a home across the rest of England and Wales, and the market doesn't show any signs of slowing down.

Doug Shephard, director of Home.co.uk, is concerned that rising prices risk creating a housing bubble in the capital, commenting: "Soaring prices may well be welcome news for homeowners who see their equity growing, but, on the flip side, they are highly troubling for potential buyers and create severe downside risk.

"The growth curve in prices over the last 12 months alone appears unsustainable [and the] overriding concern is that further stimulation from the Help to Buy scheme will only expand the bubble even further by increasing the amount of demand in a market plagued by limited supply.

"… all investment bubbles pop eventually. It's just a matter of time," he warns.


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