The average house price in the capital is now more than £345,000, the rise significantly bucking UK trend
Strong demand from overseas buyers has contributed to a 2.8 per cent rise in London house prices over the last 12 months, according to official figures.
The average house in London cost £345,298 in December, an increase of 0.8 per cent on November’s figures, according to the Land Registry.
London’s rise of 2.8 per cent since December 2010 makes it the only region of England and Wales where prices have increased annually. Price falls range from a drop of 0.2 per cent in the South East and East to a sharp decline of 7.1 per cent in the North East.
The City of Westminster is the London borough with the highest annual price rise, with the cost of a house rising by 8.9 per cent over the last 12 months to hit £677,752.
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Lewisham and Kensington and Chelsea experienced the highest monthly increases. The price of the average house rose by 1.3 per cent in both areas, with buyers paying an average of £271,909 for property in Lewisham and £967,951 in Kensington and Chelsea, the London borough with the highest average property prices.
But it was not all good news in the London boroughs. The biggest annual price drop was seen in Newham, where prices fell by 2.5 per cent to £221,228.
House prices fell by 2.3 per cent in Greenwich in December compared to the previous month’s figures. The average house sold for £257,338.
IHS Global Insight chief economist Howard Archer reckons prices across the country will drop by five per cent this year as rising unemployment, low wage growth and “major concerns over the economic outlook” take hold.
The banks’ ability to lend may be hurt by problems in the money markets, Archer said, but falling inflation should start to ease the pressure on consumers’ incomes and help to steady prices towards the end of 2012.
Archer said: “However, unemployment is likely to rise appreciably further and wage growth looks set to remain muted so the overall environment will still be very tough for households.”
The Land Registry’s figures also showed a six per cent fall in completions in October, the latest month for which figures are currently available, following two months of increases. There number of million-pound properties sold fell by 10 per cent.