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London house prices up almost 20% in a year

Emma Lunn
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Emma Lunn

House prices in the UK are up 11.7 per cent in the year to August 2014 with London prices surging almost 20 per cent in the past year, according to the latest official figures.

The house price inflation rate for London is five times the increase seen in in north east England.

The Office for National Statistics (ONS) data also revealed that the annual rate of house price growth in England hit 12.2 per cent in August – the highest figure for a decade.

Annual house price increases in England were driven by an annual increase in London of 19.6 per cent and to a lesser extent increases in the South East (12.3 per cent) and the East (11.6 per cent).

Excluding London and the South East, UK house prices increased by 7.8 per cent in the 12 months to August 2014. On a seasonally adjusted basis, average house prices increased by 0.6 per cent between July and August 2014.

In August 2014, prices paid by first-time buyers were 12.9 per cent higher on average than in August 2013. For existing owners, prices increased by 11.2 per cent for the same period.

Stephen Smith, director at Legal & General Mortgage Club and Housing, said: “Much of the growth we have seen in the past 12 months has been driven by London and the South East and contrasts markedly with much lower rates of growth in other parts of the country.

“Over the long term price rises closer to the rate of inflation are preferable if we want a healthy and sustainable market.”

Andy Knee, chief executive of LMS, warned that tighter lending regulations coupled with high prices have started to introduce a note of caution to the market.

“Recent findings have also shown that buying a home in London is now less affordable than it was at its previous peak in 2007 adding to these worries,” he said.”

“Although London and the South East have seen monumental growth in recent months, it is worth noting that regions outside of this have seen far more modest increases – 7.8 per cent increase compared to the same period in 2013 – which will come as welcome news to many homeowners in these areas, with some having spent several years in negative equity after the financial crash hit.

“For many, a boost to house prices comes as long-awaited news and a sign of a recovering market.”