The average London house price has risen to almost £500,000, according to official statistics that highlight the north-south divide in the property market.
Data from the Land Registry found that the average price in the North East of England has dropped below £100,000.
House prices in England and Wales increased by 1% in September, reaching an average of £186,553. This is about £6,000 higher than the average selling price recorded at the peak of the last property boom in late 2007.
However, London’s shocking house prices are disguising wide regional variations. While the typical home has risen in value by 5.3% in the past 12 months, the average London property has experienced 9.6% growth to hit £449,997.
Ten London boroughs have recorded annual price growth of at least 10%, including Newham at 13.6% and Greenwich at 12%. However, prices are steady or falling annually in a few boroughs, including Camden and Hammersmith & Fulham.
In the South East, excluding London, and the East of England, prices have increased by 8.5% and 8.3% respectively over the last year. Huge rises have been seen in Reading at 15%, Luton at 14% and just under 11% in Thurrock, Essex.
Contrastingly, in the North West of England, the annual rate of price growth is just 2.5%, taking the average value to £115,594.
The North East is the only region to have recorded price declines over the year. Last month, the average house price in the region fell by 0.3%, taking it to just £99,559.
Managing Director of buying agents Garrington Property Finders, Jonathan Hopper, believes that London’s “half-million milestone” was inevitable.
He adds: “The average London property price won’t stay at £500,000 for long. Bullish sentiment has driven annual price inflation in the capital close to double digits again, and the half-million mark could soon be forgotten.”
He also says that the data reveals how strong the north-south divide is: “Even though the North West has reversed the sudden month-on-month drop in prices it saw in August, prices in the North East have slipped back into negative territory. By contrast, much of the south and east looks like one giant hotspot, as the national picture returns firmly to type.”1
Chief UK Economist at IHS Global Insight, Howard Archer, expects house prices to increase by around 6% in 2016: “We believe house prices are likely to see pretty solid increases over the coming months, but will not race ahead.
“Higher interest rates are unlikely to have a major dampening impact on housing activity for some time to come. Interest rates look increasingly unlikely to rise until well into 2016, while the Bank of England is stressing that when interest rates do start to rise, they will only move up gradually and to a limited extent.”1
1 http://www.theguardian.com/money/2015/oct/28/average-london-home-500000-in-north-east-england-100000