House prices in London have risen by nearly 10% in the last year, adding to signs of a sharp north-south divide in the market.
A 9.7% increase in prices in London over the year to July helped to push the value of homes across England to a new high of £255,000 on average, the Office for National Statistics (ONS) said.
House prices in London and the South East both raced past their 2008 peaks and stood at an average of £438,000 and £303,000 respectively, while prices in the East of England and the South West also edged close to their previous highs.
But the UK market was still patchy and while house prices were up by 3.7% year-on-year in England they dropped by 2% in Scotland and 0.7% in Wales.
Prices in Northern Ireland were up by 1.8% year-on-year as the market showed signs of starting a slow recovery after some sharp falls following the economic downturn.
The annual pace of house price inflation picked up across the UK in July to its fastest rate recorded in 2013 so far at 3.3%, taking values to £245,000 on average. Prices rose by 0.3% month-on-month.
Peter Rollings, CEO at Marsh & Parsons, comments: “A strong recovery is evident across much of the UK as house prices continue to rise at their fastest rate in many years. The market is helped by an improving economy, low interest rates, and government-backed schemes such as Help to Buy. But while the market buoyancy is clear, any talk of a housing bubble is wide of the mark.
"Prices in most parts of the country are still well below the market highs of 2007, and the recovery in many parts of the UK is relatively muted. Ultimately, house prices can only increase at a rate that people can afford – so while wages remain low, and lending continues to be checked, there is a limit to how high house prices can rise.
“However the London property market tells a different story, with price increases that dwarf those in the rest of the UK. In the Prime London property market, an imbalance of supply and demand means that prices rise faster than in other areas.
"The huge demand for property in the most desirable parts of the capital, from both UK and overseas buyers, is helping to push prices higher. In the three months to June, we recorded 11% more buyers entering the market in competition for 14% fewer properties. Property is changing hands in record time and for close to the asking price, with 98% of the asking price for Prime London property regularly being achieved.”
