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London house prices up a fifth in 12 months

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House prices in London have risen by almost 20 per cent in the last year, figures released by the Office for National Statistics have shown.

Prices in the capital increased 19.1 per cent in the 12 months to July 2014.

Outside of London the regions showing the strongest growth were the South East (12.2 per cent) and the East (10.6 per cent).

The UK average growth was 11.7 per cent, although if London and the South East are excluded this figure drops to 7.9 per cent.

Total house price annual inflation was 12.0 per cent in England, 7.4 per cent in Wales, 7.6 per cent in Scotland and 4.5 per cent in Northern Ireland, the statistics revealed.

David Newnes, director of Reeds Rains and Your Move estate agents, said homeowners outside the capital should not be misled by booming London prices.

“What’s happening in London may be eye-catching, but it is akin to looking through a kaleidoscope – and skews any view of the current total housing landscape,” he said.

“Peeling back the regional layers gives a much more informed view of the core reality of the current market. According to our own research, house price growth slowed across all regions except for London, the South East and East Anglia in July. While these three regions continue to set new house price highs, the rest of the country is nowhere near these levels of growth.

“Most recently we’re seeing asking prices in the capital start to be reined in, which will apply the brakes on annual house price inflation as the market steadies. With evidence of London starting to cool off after strong growth earlier in the year, it is critical that the underlying momentum that has stimulated much needed increased volume in the rest of the market is allowed freedom to keep moving, whilst any price rises are kept steady and under control.”

Jonathan Harris, director of mortgage broker Anderson Harris, said he had seen a cooling of the market over the summer period: “ONS house prices tend to be more historic than the other indices, revealing that there was no cooling in the housing market in July with house prices continuing to increase strongly.

“However, since then the temperature has definitely dropped as growing uncertainty – both with regard to the political climate and interest rates – takes the wind out of prospective buyers’ sails.”

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