The average price of a home in London has smashed through the £500,000 barrier for the first time after surging more than seven per cent over the past year.
Prices rose at an annual rate of 7.3 per cent in the second quarter of the year, up from 4.8 per cent in the first quarter. The average value rose £27,359 over the three month period from £482,576 to £509,935.
It is the first time since Nationwide began compiling regional figures in 1973 that the average cost of a home in London has exceeded half a million pounds. It has increased nearly 40 fold since being recorded as £12,848 in the fourth quarter of that year.
Nationally prices are rising faster than any time since 2004 with the average surging 13.4 per cent to £245,432 in the year to June. The stamp duty holiday that provides buyers with tax savings of up to £15,000 starts being wound down tomorrow though it does not end fully until October.
Nationwide’s chief economist Robert Gardner said: “Underlying demand is likely to remain solid in the near term as the economy unlocks. Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee.”
“Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the strong incentive for people to bring forward their purchases to avoid the additional tax.
“Nevertheless, underlying demand is likely to soften around the turn of the year if unemployment rises as most analysts expect, as government support schemes wind down. But even this is far from assured. Even if the labour market does weaken, there is also scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet."
Lucy Pendleton of London estate agents James Pendleton, said: “Even in London, which has been trailing the performance of the country at large recently, growth has jumped this quarter despite prices being significantly higher."
"The capital has shrugged off the withdrawal of stamp duty relief as confidence from buyers, who can almost smell the end of Covid restrictions, finally sense a return to normality. There’s a sense that this is now giving people the opportunity to make a longer term commitment to the capital which is helping sales across all property types.”