London soars as average price tops £514,000

London property prices rose at double the pace of the rest of the UK last year, new figures show.

Prices in the capital rose 12.4% year-on-year, according to The Land Registry, against average UK growth of 6.4%.

The average London property now costs £514,097, against £188,270 across the UK as a whole.

London also posted the highest monthly house price growth in December at 2.1%.

The North-East saw the slowest annual price growth at just 0.8%.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Homebuyers in December experienced a notable annual jump in prices, with no glimpse of a slowdown despite the festive period."

Murphy said that first-time buyers in the capital face an especially tough market.

“The Government’s London Help To Buy scheme is a sorely needed initiative, but presents a temporary solution to a long-term problem.

“Insufficient property supply will continue to drive up higher prices if not properly addressed.”

Adrian Whittaker, sales director, New Street Mortgages, said the unseasonal Christmas jump in house prices characterise a market where limited supply meets rising demand.

“In such a market, it’s crucial that borrowers have access to a lender that can offer a fast and consistent mortgage application process, as this could be the difference between securing a property and losing out to another buyer.”

The number of completed house sales in England and Wales fell 8% to 79,960, while the number of £1m properties sold in England dropped 2% to 1,231.

Richard Sexton, director of chartered surveyor e.surv, said the lack of homes on the market is starting to hit property chains.

“It’s a vicious circle – the lack of listings is dissuading many homeowners from moving, so instead some families may be choosing to renovate and extend properties to suit their changing needs. This further diminishes the choice on offer.”

Sexton said areas surrounding the capital – in particular the South East and East Anglia – are being lifted by demand patterns rippling out from London.