London house prices climbed 7.8 per cent over the past 12 months, new figures show, with demand outstripping supply most heavily in the first-time buyer market.
The average greater London house price is currently £615,115, according to data published today by Rightmove.
Properties at the top end of the market have seen the biggest 12-month increases, but more recently they have declined in price while first-time buyer homes have shot up.
From June to July the typical first-time buyer property, a home with two bedrooms or fewer, jumped by 1.1 per cent.
Yet in London’s most expensive borough, Kensington and Chelsea, average prices of properties coming to the market are 9.7 per cent higher than a year ago, but 7.2 per cent less than in June.
“Stretched affordability is acute in nearly all market sectors in London, but the lower-end sector with up to two bedrooms has high demand from first-time buyers, down-sizers and investors,” said Rightmove director Miles Shipside.
It comes amid a wider pick up in housing demand nationally, which has seen prices climb 5.1 per cent year-on-year in July, according to Rightmove. Gross mortgage lending soared by 29 per cent in June to £20.5bn, the Council of Mortgage Lenders said yesterday. It was up 15 per cent on the year.
“Lending picked up in June, signalling an end to election jitters that caused some prospective buyers and sellers to postpone entering the market,” said Jeremy Duncombe, director at the Legal and General Mortgage Club.
“We expect this trend to continue in the remainder of the year as an increase in wages and low inflation will allow more people to reap the benefits of record low interest rates.”
Meanwhile, it was first-time buyers facing the most competition for homes. Rightmove said the number of enquiries per property for two bedrooms or fewer is 24 per cent higher than for larger properties of three bedrooms or more.