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London house price premium at lowest level for eight years

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A view of an estate agents in London
A view of an estate agents in London

The house price gap between London and the rest of Britain has narrowed after suburban asking prices have soared.

Famed for its pricey postcodes, London has a well-earned reputation for having the most expensive properties. But this lead has narrowed as the national average asking price has hit a record £333,564 this month, according to property website Rightmove.

The figure is £5,767 more than the previous all-time high, recorded in April, as demand for properties has outstripped supply and bidding wars have become commonplace.

London’s prices have lagged in comparison, with growth of 0.2pc since March 2020.

Outside of the capital it has been a different picture. Wales, the North West and Yorkshire and the Humber saw price growth of 13pc, 11.1pc and 10.5pc respectively since March last year.

Average London house prices are now 2.9 times higher than prices in the northern regions, the smallest ratio recorded by Rightmove since 2013.

Tim Bannister, of Rightmove, said: “Buyer affordability is increasingly stretched, but there’s obviously some elasticity left to stretch a bit more as many buyers are squeezing their way into higher price bands.

“In 2020 we saw a surge in southern coastal and rural areas, but so far 2021 is proving to be the year of the northern mover, satisfying their pent-up housing needs and narrowing some of the huge price gap with London,” he said.

When the stamp duty holiday ends later this year agents and surveyors said they expected the red-hot property market to cool.

"Rethinking" rural move

Both renters and buyers left cities and towns in droves last year in search of green space and a better lifestyle whilst working from home. But both groups have now started to return to urban areas.

London-based estate agency Chestertons registered a 78pc increase in new deals this month, when compared with May 2019, and a 38pc jump in new buyer enquiries.

Cory Askew, of the company, said: "With lockdown restrictions continuing to ease and property prices in rural areas catching up, we expect an increasing number of house hunters to rethink their move to the countryside and opt for one of London’s outer zones instead."

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