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 ยฃ300,000 mark at ยฃ298,216. 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 capitalโs 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 Londonโs 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.
Nationwideโs chief economist Robert Gardner said: โLondon 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.โ
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 ยฃ164,785.
Gardner said: โThe 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.โ
He added: โAlthough 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.
โThanks 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.
โThis meant that although demand and supply were both weak, they remained relatively well-matched.โ
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