A new report from leading lender Nationwide has shown that the gap between London house prices and the rest of the UK is continuing to rise.
Overall, UK property prices rose by 0.5% in September, with annual house prices up by 3.8%, according to the research.
On a quarterly basis, London property prices increased to 10.6% in the third quarter of 2015, rising from 7.3% in the second quarter. This is in comparison to the average property price rise in England of 1.8% in the third quarter of 2015.
Regionally, house price growth soared in Southern England in and London, but slowed in the Midlands and the North. Unsurprisingly, the capital was the strongest performing region, with prices in the neighbouring Outer Metropolitan area rising from 6.8% to 9.5%.
The price of an average home in London is £443,399 is more than double the UK aggregate and more than three times the price of the average property in the cheapest British region.
Performing weakest is the North of England, with prices down by 0.6% year-on-year. However, house prices continued to recover in Northern Ireland, with annual growth of 6.5% recorded in the third quarter. This said, average prices are still 44% below their pre-recession peak.
Wales saw a year-on-year increase of 1.9% in property prices, while Scotland recorded a fall of 1.3% in the same period. In the South, price growth exceeded that in the North for the 26th consecutive quarter. Property prices in the South were up 8% year-on-year, but in the North, prices rose by just 1%.
In monetary terms, the gap in average property prices between the South and East of England is at a record high, exceeding £150,000 for the first time. Average prices in the South are now twice as high as those in the North.
Gap in prices between London and UK regions increases
‘The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth,’ said Robert Gardener, chief economist at the Nationwide. ‘However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.’
‘Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead. The slowdown in house price growth since the middle of 2014 has not been confined to, nor has it been driven primarily by, developments in London. The capital has continued to see price growth at or above the rate in the UK overall over the past four quarters and the annual rate of price growth in London is currently the highest in the country,’ he continued.
Concluding, Mr Gardner observed that, ‘taking a wider view, regional house price performance was mixed in the third quarter.’ He went on to say that, ‘eight UK regions recorded a slowdown in the annual rate of growth while five saw acceleration. Most parts of the country continued to see annual house price gains but the exceptions were Scotland and the North West which both recorded small declines.’