Eleven point seven per cent growth seems big enough, given low wage growth and inflation of 1.2 per cent. But what about the context?
According to data from the Office of National statistics (ONS) that 11.7 per cent was dwarfed by London’s figure again: the capital saw house price inflation of 19.6 per cent over the same period.
If that sounds like a big jump, consider that house prices in the North East grew by only 3.8 per cent:
A house in London, on average, now costs £514,000 according to the ONS (other sources, such as Rightmove, have it higher).
That means that for the price of one pad in London you could buy 3.8 in Northern Ireland, the ONS ‘region’ with the lowest average price, or 1.9 average UK houses.
With London house prices bigger and growing faster what effect is that having on overall house price inflation? A fairly big one. The UK excluding London grew at 9.1 per cent in the 12 months to August, compared to 11.7 per cent including it.
This isn’t a new trend either. A look at the data shows that London usually grows faster than the rest of the country, as its voracious demand for property asserts upward pressure on the market.
London’s story in the crisis is different to other regions’. It has recovered faster, regaining its pre-crisis peak long before the rest of the UK, with or without its inclusion in the sums.
The dotted lines represent the pre-crisis peaks for the three series. Note this is indexed data and that the bases (100 points) was set by the ONS in February 2002.
In April 2012, three years and three months after its January 2008 peak, London’s house prices regained their former lustre.
It wasn’t until October 2013 – 18 months later – that the UK followed suit. But, take London out of the equation, and the rest of the UK recovered in May this year – two years later.