UK house prices surged last month, taking the average cost of a home to an all-time high – but London is falling behind.
The country's average rose by 1.9 per cent in October, taking the annual growth to 10.5 per cent. That means the national average cost of a house now stands at £224,242, according to estate agent group Haart.
In London, prices rose 1.5 per cent on the month, taking the annual increase to 4.2 per cent. The average price of a house in the capital is now £510,925.
While there has been fear of a bubble growing, particularly in London, the estate agent believes the lack of supply means prices could continue to rise.
Paul Smith, chief executive of Haart, said: “This trend is the outcome of diminished stock levels which are currently at their lowest since February, meaning there are now 12 buyers chasing every property to come to market.
“The government must take drastic action to encourage the release of homes suitable for families and prevent record high price rises in 2016 for the core of the UK property market. The new Help to Buy ISA available from next week should help first-time buyers save for their deposit but it is stimulating demand without addressing the underlying issue of lack of supply.
“While house prices in the rest of the UK are likely to continue their current trajectory in 2016, the top end of the market, particularly in London, will see a price correction because of the impact of stamp duty – likely to consist of a 10 per cent drop in value for homes currently priced over £1m.
"Our data is already beginning to show London falling behind the rest of the UK in terms of growth in house prices as a result of this.”