In graphs: London house prices up 18.7pc in just a year
House prices in London rose 18.7 per cent in the 12 months to April according to new figures released today by the Office of National statistics (ONS). Across the country prices were up 9.9 per cent, with growth outside London and the south east at 6.3 per cent.
Despite figures from Rightmove yesterday showing the market may be cooling, seasonally adjusted figures showed that prices had risen by two per cent between March and April.
This shows the 0.1 per cent increase reported by Rightmove for May could be off the mark: ONS figures are widely considered to be more accurate.
Rightmove uses asking prices to calculate its figures – meaning they are typically higher than their ONS equivalents, which are based on sale prices. You can read about how why the numbers are crunched differently here. All eyes will be on government figures for May, when they are released next month.
The big rises will do nothing to quell concern that the housing market is overheating, with house price inflation of 10.4 per cent in England dwarfing headline inflation of 1.5 per cent.
First-time buyers will be hardest hit, with the average first purchase rising by 10.7 per cent. The average price paid by a first-time buyer was £199,000, showing the difficulty of getting on the housing ladder in the capital where the average cost of a home was £485,000.
Such figures increase the likelihood that the Bank of England will feel obliged to intervene, using new powers given by the chancellor, George Osborne, to limit mortgages based on income.
The role of London in the growth is significant and shows the desirability of homes in the capital compared to other regions of the UK. This graph shows the scale of the difference in stark relief:
All eyes will be on Osborne and the Bank of England – and the next round of statistics – as the debate around property's role in the recovery continues.