The average London asking price is now £565,863 after leaping an "unsustainable" £50,484 in a month, according to new research from Rightmove out today.
That marks an average asking price increase of 10.2% in a month in October, following low listing activity and stagnant asking prices in August and September.
It is also £28,852 above July's record of £515,379, a rise of 5.6%. This means that London property prices grew at around 2% a month in the most recent quarter.
Prices in outer London now average £461,937, more than double those in the rest of England and Wales at £226,861, even though average wages are only 60% higher.
Prime inner London property has reached stratospheric levels, with an average price of £937,110.
Miles Shipside, Rightmove director and housing market analyst, said this kind of price hike is not sustainable: “Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3% over August and September.
"However, this month’s rebound in the number of sellers brings the quarterly growth figure back into line with the recent trend at around 2% a month.
"Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare."
There is a long-standing imbalance between supply and demand in London, and as a result both the average price and the entry price are high. Hence, phase two of the Government’s Help to Buy scheme is likely to bypass many buyers in the capital and mainly benefit those in other regions, he said.
Rightmove research indicates that 80% of those who intend to buy in the capital will put down a deposit of 10% or more. This means the current range of 5% deposit Help to Buy products is of no benefit to many Londoners for whom the income to service a mortgage is a greater challenge.
Shipside said: “In London, the buying power required to get onto or move up the housing ladder means you have to tap into the Bank of Mum and Dad rather than buy courtesy of a helping hand from Uncle George. Indeed, nearly two in five first-time buyers expect to receive parental assistance."
There is no risk of a price bubble outside London, Shipside said, as Rightmove's figures showed two regions recorded monthly falls, five are negative year-on-year, and seven in 10 have annual price rises lagging behind inflation.
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