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London goes off the boil as regional house prices surge

UK house prices increased 5.7% in the year to June but London is trailing as the capital's property market continues to cool.

New figures from the Office for National Statistics show house prices up 9.2% in the East and 7.7% in the South East.

Annual growth in the capital fell to 5.3%, a far cry from the 19.3% surge seen one year earlier.


Peter Rollings, chief executive of Marsh & Parsons, said price rises in London continue to be overpowered by the East and South East.

“Costlier property taxes at the highest rungs of the market have forced London off the boil, and dampened the appetite in the market momentarily.”

Richard Sexton, director of e.surv chartered surveyors, said: “The housing market recovery is no longer being pulled along by London. Rather, it is regions like East Anglia and the South East that are marching forward.

“These areas have witnessed strong economic revival, driven by a recovering job market that has created pockets of higher activity in the local housing markets.

“Some buyers are rejecting London and are looking to cheaper surrounding areas as an alternative to the capital’s pricey housing market.

“This influx of interest in the Home Counties and the southern belt has added to the demand, pushing up property prices in these regions.”

Brian Murphy, head of lending at Mortgage Advice Bureau, said current growth figures make for more affordable conditions than one year ago, when UK prices were rising at 10.2%.

“However, with the average house price at £277,000 and house prices still rising faster than wages, many aspiring homeowners will struggle to save the amount required for a deposit.

“Improved availability of high-LTV mortgages – and not just through the Help to Buy scheme – would provide invaluable support for those struggling to meet deposit requirements.”

Stephen Smith, director, Legal & General Mortgage Club & Housing, said the data shows the scale of the imbalance between supply and demand.

“Much has happened in the market since June that is likely to stimulate more demand, such as hints at a base rate rise from the Bank of England's monetary policy committee."

Smith warned that further increases in house prices will push more people out of the market, forcing them to postpone buying their own home until later in life.


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