New data from the Nationwide reveal London homes increased in value with average prices now over £400,000 for the first time.
Property in the capital has seen prices jump 25.8% in the last year, the largest amount for 27 years. The average price is now £400,404 and 30% higher than the peak reached in 2007.
The rise in prices across the country was 11.8% the biggest rise since January 2005, pushing the average price of property to £188,903 but still only half the price of the average London home.
This is the fourth quarter in a row that the annual rise in house prices in the UK has increased making it difficult for first time buyers and home movers to buy.
This is the fourth quarter in a row that the annual rise in prices in the UK has increased making it difficult for first time buyers to afford their first home.
London boroughs double-digit growth
Every borough in London has posted double-digit growth over the last year and the top ten leaders are as follows:
| Area | Change |
|---|---|
| Lambeth | 37% |
| Camden | 36% |
| Haringey | 32% |
| Tower Hamlets | 32% |
| Southwark | 29% |
| Lewisham | 28% |
| Waltham Forest | 28% |
| Hackney | 27% |
| Wandsworth | 27% |
| Hammersmith & Fulham | 27% |
Even the lowest growth rate, Barking & Dagenham with 15%, exceeded the national average over one year.
Higher property values in London for older homeowners allows the equity release mortgage buyer to access wealth to consolidate debt or even help children start or expand a business.
The Nationwide has said that the growth in London was not sustainable and is likely to slow. However, despite the slowdown in mortgage lending the figures for June were strong and up 1% for the month compared to 0.7% for May.
Limits placed on mortgage lending
To limit the rapid rise in house prices the Financial Policy Committee (FPC) have introduced several measures restricting mortgages deals to first time buyers, home movers and remortgage buyers.
From October lenders will have restriction of the number of mortgages they can have with income multiples of 4.5 times which cannot exceed the 15% cap of all new mortgages. They will also have to apply an affordability stress test to ensure all mortgage applicants can afford payments with a 3% rise in interest rates.
Other factors such as the mortgage market review (MMR) which already requires lenders to check affordability should help to limit the number of successful applications and prevent the market from overheating.
However, these measures cannot solve the underlying problem, the chronic lack of new-build homes to meet demand requiring a significant increase in house building.
What are your next steps?
Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth for home or garden improvements and holidays.
Learn more by using the equity release mortgage calculator, property value tracker chart and mortgage cost calculator. Start with a free mortgage quote or call us and we can take your details.
At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
