The capital’s house prices are now nearly one third higher than they were before the financial crisis, up 31 per cent from January 2008. Prices in the south east and east of England are respectively 7.2 per cent and 4.7 per cent above the same benchmark – while in every other region in England the prices are still below their pre-crash levels.
“London has long been akin to its own city state, and is wholly unrepresentative of the broader nationwide picture,” said Peter Rollings of Marsh and Parsons.
House prices across the UK rose by 9.9 per cent, but the figure was just 6.3 per cent once London and the south east of England’s increases were stripped out. In Wales and Northern Ireland, prices only rose by 3.3 per cent and 2.6 per cent over the same period.
Research by the Building Societies Association (BSA) released today showed that 62 per cent of Londoners believe the capital’s housing market is a bubble, while just 24 per cent of people across the country believe there is a general UK bubble.
“The single biggest issue in the market remains lack of supply. The population is increasing, household sizes are falling – so there are more of them – all leading to the pressure on prices which we are seeing in varying degrees across the country,” said the BSA’s Paul Broadhead.
Despite the increase, other data sources have suggested that house price growth is now slowing slightly - Rightmove’s latest figures show asking prices in London dropping by 0.5 per cent between May and June.