London market drags up overall UK house prices

 
Ben Southwood
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THE UK’S house price recovery continued in May, led by a buoyant <a href="/house-prices">London property market</a>, according to data released yesterday by the Office for National Statistics.

In the year to May UK house prices climbed 2.3 per cent, driven by a 7.2 per cent jump in London – the largest since November 2010 – and rises of over three per cent in Wales and south east England.

Month-on-month prices were flat, adjusting for seasonal variations, but values have climbed compared to May 2011, which along with February 2011 saw two-year lows.

“While property prices in London continue to rise, in other parts of the country the picture is quite different,” argued independent buying agent Gabby Adler.

“Strip out London’s performance from the national average and the numbers are far less impressive, which is why such an index only has limited use, masking as it does regional differences,” she added.

Analysts are hoping to see how the recent £50bn of extra quantitative easing and the newly-announced Funding for Lending scheme would affect the markets through lower restrictions on credit and reduced interest rates.