It is official (well, not really), London has broken free of the UK housing market reality and is now almost a market in its own right according to the latest figures.
The latest index released today by the Nationwide building society shows that the average price of a home in London is now GBP 318,214, some 5 percent higher than the 2007 peak. The firm puts the growth down to the still-rock-bottom interest rates for those with good credit, the economic recovery, which is finally strengthening, and also the continued surge of wealthy foreigners chasing property in the sought-after city.
Meanwhile the rest of the UK is still far from a bed of roses. According to the index the national average house price now stands at GBP 168,941, up from GBP 162,262 in December. While this shows the fastest rate of growth seen since 2010 prices have still yet to recover all that was lost in most places and some regions are still depressed. Indeed, the national average is still 9 percent below 2007 levels. The difference between London and the rest of the UK becomes even more pronounced when London is taken out of the national average leaving prices in the capital twice as high.
The Nationwide data confirms recent reports from the Halifax and the Royal Institute of Chartered Surveyors.
The wider availability of mortgages is certainly playing a factor. New government programs, the Funding for Lending Scheme (FLS) and the Help to Buy scheme, helped boost market confidence, analysts say. The Council of Mortgage Lenders recently reported that May was the best month for lending since 2008.
"The London property market is an extraordinary microcosm," Jonathan Hopper, managing director of property search consultants Garrington, told the Guardian newspaper. "It has effectively broken free of the rest of the UK and is operating in its own stratosphere.