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London house prices up £60,000

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Property prices in the UK’s capital city have risen by 12.8% in the last year, with London remaining an attractive option for overseas buyers.

Research by property firm Home found that while global economic uncertainty has increased, London has remained a popular place for overseas buyers.

This has caused house prices in the capital to rise dramatically, with the average property now worth £60,000 (12.8%) than a year ago.

Supply issues have also worsened with the number of new homes for sale down 18% on last year. Total supply in the London market has fallen by 59% since 2007.

Every region of the UK posted higher prices than at this point in 2014, but growth in southern areas continued to far outstrip the rest of the country. The North East was the only region to see property prices fall month-on-month.

This has seen another north-south divide based on the amount of time a property spends on the market. Properties in southern regions spend less time on the market, a figure which is getting shorter all the time. By comparison northern waiting times have remained stagnant since 2008.

“With prices in London up 53.5% and the North East down 0.4% over the last five years, it is clear that the northern and southern property markets are poles apart,” said Doug Shephard, director at Home.

“We maintain that, in view of such diversity of fortunes across the country, it is near impossible to imagine how the Bank of England can realistically raise interest rates anytime soon. Property markets in the North and Wales remain very fragile and would suffer significant declines should the cost of borrowing rise, causing negative equity and devastation of mortgage lenders’ balance sheets.”

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