London house prices are continuing to soar ahead of the rest of the country, according to the Land Registry house price index. The average property price in London has risen by 13.8 per cent to £414,000 over the past 12 months.
The average house price in England and Wales climbed by 5.2 per cent to £170,000, with the South East of England enjoying the second most rapid rise of 7.1 per cent to £223,000.
London's rocketing house prices have reinforced fears that the UK is or could be heading toward another unsustainable property boom.
Commenting on today's figures Nicholas Ayre, managing director of homebuying agency Home Fusion, said "there are growing fears that if we are not in bubble territory yet it won't be long before we are, with the Bank of England raising the alarm about borrowers over-extending themselves."
A period of prolonged low interest rates combined with government interventions such as Help to Buy are certainly adding fuel to the rapidly booming property market.
However, while house prices are rising rapidly, particularly in London, there may be little need to worry that another financial crisis is in the making.
Writing in today's City A.M., Ben Southwood, head of macro policy at the Adam Smith Institute, said:
UK planning regulations are extremely tight. This is why London rents are so high; this is why British houses are the smallest in Europe; this is why getting planning permission makes a plot of land many multiples more valuable. Simply put, too few houses are built because builders are not allowed to build them.
Debates over liberalisation of the planning laws were reinvigorated earlier this week when the Campaign to Protect Rural England's (CPRE) latest update on the government's reforms claimed "rural England was under siege."
Popular opinion may tend to side with the CPRE. Over half of the adult population believes that England is built-up. The truth is that just under 10 per cent of land in England is urbanised and half of this area is made up of gardens.
Whilst it is true that 190,000 homes are planned to be built on the greenbelt this amounts to roughly 0.29 per cent of greenbelt land. Even small increases in the amount of greenbelt land available for use would herald dramatic results.
The LSE's Paul Cheshire has estimated that taking a 1km ring inside the M25 would yield enough land for more than a generation of building at current London rates. As supply fails to keep pace with demand homeownership is a fast diminishing prospect for swaythes of the population.
"Another rise in house prices is another rise in people left priced out, with thousands forced to wath their dream of a home of their own slip further out of reach. With the government's own figures predicting that house prices will continue to climb, and so many people already priced out no matter how hard they work or save, it's time that the government start meeting people halfway by urgently addressing our shortage of housing" said Campbell Robb, chief executive of of housing charity Shelter.
The situation is likely to get worse before it gets better, with London's population set to increase by a further 1m by 2021. "Supply constraints are not going to be resolved any time soon. The government has made the right noises about building more homes but this takes time," said Ayre.