Average London Home Now Costs £363,000

The cost of a home in London climbed by the biggest amount in more than a decade, says Nationwide in their latest house price index. The building society estimated that in the first quarter of 2014, average house prices in London rose by 18% compared with the same period last year. The average home in the capital now costs £362,699. The gap between house prices in London and the remainder of the UK has become the widest since records began in the 1970s as the North-South gap in property shows no signs of closing. In London, the borough of Brent witnessed the strongest year-on-year growth, with average house prices up by 31% at £465,502, followed by Lambeth, which recorded annual growth of 30%, pushing up the average price to £496,729.

9.5% average Q1 price increase across UK

Residential prices across Britain increased by 9.5% in March compared with the same month last year, the highest rise in almost four years. The average property across the UK is now £180,264. Regions in the south of England recorded the fastest gains in property values. Prices in the Outer South East areas were up by 10.1% year-on-year, while those in the Outer Metropolitan areas rose by 10.6% to £273,998.

Nationwide’s index also showed that prices in Northern Ireland are up by 5.4% annually, reaching £114,495 on average; prices in Wales have risen by 5.2% to £139,911; while homes in Scotland jumped by 7.6%, recording an average of £138,386. Robert Gardner, chief economist at Nationwide, predicted that in London the chronic lack of housing could mean even higher prices. “The upturn in the supply side of the market continues to lag far behind, with the number of new homes being built in England still around 40% below pre-crisis levels,” he said.

The figures came the day after the first anniversary of the launch of the government’s Help to Buy loan scheme, which offers homebuyers an interest-free loan of up to 20% of the value of a new-build property costing up to £600,000. The second part of the scheme offers a taxpayer-backed guarantee to lenders with 95% mortgages.

Nearly 400,000 property millionaires

Zoopla, the property website, has estimated that in the past year 92,985 more property millionaires have been created in Britain, bringing the total to 393,127. Just over 60% of them are in London. Kensington and Chelsea has the highest number, with 41,393, or 17% of the capital’s total. Outside London, 21,028 more property millionaires were created in the South East, making 82,614.

Worries that London price growth may be unsustainable

However, Neal Hudson, associate director of residential research at Savills, thought the growth in London was unsustainable. “The problem is that with low earnings growth the debt will remain at the same level – unlike in the 1970s and 80s when we had decent wage growth and homeowners got progressively wealthier and were able to move up the housing ladder,” he commented.

If you would like further information about any residential property matter, speak to a property lawyer.

IBB has one of the largest real estate groups in West London and the South East, with expertise in residential conveyancing. Contact a conveyancing solicitor by calling us on 08456 381 381 or emailing enquiries@ibblaw.co.uk.