London house prices smash 2007 peak in 2.8% jump

Average house prices in London are now greater than in 2007, according to the latest figures from Nationwide building society.

UK-wide prices have been unchanged in March, but increased by 0.8% over the same period in 2012 – the first time since February last year that the year-on-year rate of change has been positive.

This means the average price of a UK home is now £164,430, nearly £20,0000 below the October 2007 peak of £186,043. However, London prices have bucked the trend, with the average property price in the capital increasing by 2.8% between January and March, to £306,919. Prices are now 4.6% higher than the first quarter of 2012.

Some parts of London have enjoyed double-digit boosts, with Camden house prices up 15% year-on-year, while Hammersmith and Fulham, Newham and Southwark have enjoyed growth in excess of 10%.

Nationwide chief economist Robert Gardner said: “In recent months buyer demand has been supported by healthy rates of employment growth, as well as the Funding for Lending Scheme, which has helped to reduce mortgage costs and increase credit availability. At the same time, housing supply has remained relatively constrained.

“The outlook for the market is unusually uncertain, in part because the prospects for the wider economy are unclear, but also as the impact of a number of policy initiatives is hard to gauge.”