A survey by Nationwide has revealed that London house prices rose by 5.4 per cent this year – the highest of any UK region.
Buoyed by a fourth quarter growth of 2.6 per cent, the average cost of a home in the capital finished the year just short of the £300,000 mark at £298,216. This means that properties in London are priced at 1.6 per cent below their all-time high, whereas house prices throughout the rest of the UK are typically 10 per cent below their highest ever levels.
Unsurprisingly, London was also named the most expensive region in the UK to buy a house, and it is the least affordable region with a house price to earnings ratio of 7.4, up from 7.2 last year. The capital’s continued resilience was seemingly underlined by the fact that house prices in Camden, Greenwich, Hackney and Westminster have doubled over the last decade.
Westminster was named London’s most expensive area, while Islington saw the strongest growth in the city, with prices up 15 per cent compared to last year. It was a different story in Newham, however, where the average house price fell three per cent year-on-year.
Nationwide’s chief economist Robert Gardner said: “London saw the strongest quarterly growth rate, with prices up 2.6 per cent quarter-on-quarter. This pushed the annual rate of growth up to 5.4 per cent, making London the best performing region over the past year.”
Nationwide went on to reveal that nine out of 13 UK regions recorded house price rises over the course of the year. Prices rose by 1.1 per cent across the country during 2011, pushing the average cost of a home to £164,785.
Gardner said: “The one per cent rise in house prices recorded over the past 12 months can hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices are surprisingly resilient in 2011.”
He added: “Although high rates of unemployment, falling real wages and the uncertain economic outlook kept many potential homebuyers on the sidelines, the supply side of the market was similarly squeezed.
“Thanks to continued low interest rates, the number of forced sales remained low. Together with a dearth in building activity in recent years, this prevented a glut of unsold homes from accumulating on the market.
“This meant that although demand and supply were both weak, they remained relatively well-matched.”