LONDON -- London house prices are now 30 per cent higher than their 2007 peak, as the country’s residential property values continue to accelerate unevenly, according to two surveys released overnight.
Nationwide’s second-quarter house price index showed the cost of an average home in England’s capital breached the 400,000 pound mark for the first time -- to be more than twice as expensive as the average UK price -- after rising 7.6 per cent in the three months to June 30.
Over the 12 months to June 30, London house prices have grown an average 26 per cent.
Meanwhile, in the UK as a whole, house prices lifted 1 per cent in the month of June to be 11.5 per cent higher annually on average -- the fastest annual rate of growth since 2005, a second Nationwide house price index showed.
But average house prices across the nation remain less than 1 per cent above their pre-GFC peak while excluding London, the average price lags the pre-GFC peak by 0.4 per cent.
And the latest measures from the UK’s Financial Policy Committee are unlikely to significantly temper London’s appetite for housing transactions, or price growth in the near term, Nationwide chief economist Robert Gardner said.
The committee, which has the responsibility of identifying and addressing systemic economic risks, has recently introduced regulations to limit new mortgage lending to 4.5 times borrowers’ incomes, and to force banks to introduce stress tests ensuring borrowers could withstand interest rate rises of 3 per cent.
“It is important to note that the Financial Policy Committee does not have the tools to address the fundamental problem in the housing market -- the lack of supply,” Mr Gardner said.