London property market still buoyant

The cost of the average London home has risen to just under £350,000, according to the latest FT house price index published on Friday, well above the £200,415 average for the rest of the country, indicating the growing wedge between prices in the capital and the regions.

The FT index, which is based on Land Registry data for England and Wales, shows that, despite four interest rate rises since August 2006, the London property market is still hot. This is in contrast to the rest of the country where house price inflation is subdued.

The cost of an average London home increased by 1.2 per cent in April compared to the previous month, to £343,508. Outside London, there were only three regions in which an average property cost more than £200,000; these were the south-west, the south-east and east Anglia.

Peter Williams, chairman of Acadametrics, the consultancy which produces the FT index, said London property prices were increasingly out of step with the rest of the country. “It is the material gap between London and everywhere else that remains the most notable feature of the current market, with all that is implied for labour mobility, recruitment and retention,” he said.

House prices for England and Wales grew by 0.5 per cent in May, unchanged from April, putting the cost of the average home at £220,319. The annual rate of growth ticked up to 8.5 per cent from 8.4 per cent in April. In London, the annual rate of growth was much stronger - at 14 per cent in April from 13.8 per cent in March.