New record high for London house prices

House prices in London hit a new record high in November 2015

House prices in London hit a new record high in November 2015 - Credit: PA Wire/PA Images

Average house prices in London hit a new record of £537,000 in November after leaping by 9.8 per cent over the previous year, according to the Office for National Statistics (ONS).

The ONS report said that the 7.7 per cent annual rate of price growth seen across the UK was the fastest annual increase seen since March 2015. It said that property values were continuing to “grow strongly”.

The report said: “Upward price pressures may be a result of a shortage of supply and strengthening demand in the housing market.”

Property portal Rightmove said there are already early signs of strong demand for homes this year, with the number of visits to its website in the first working week of January up by 21 per cent compared with a year earlier.

The ONS also found that the average first-time buyer faces paying 7.4 per cent more for a property than a year ago. The typical price paid for a home by someone taking their first step on the property ladder in November was £221,000.

In the recent Autumn Statement, Chancellor George Osborne announced a three percentage point stamp duty hike for buy-to-let investors, which is set to come into force from April.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “The heat is set to rise in the buy-to-let and second home market in the short-term, as buyers rush to complete before the changes to stamp duty kick in in April.

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“In the long-term, the dearth of properties available combined with rampant demand means house price growth isn’t likely to slow any time soon. This creates clear affordability concerns for first-time buyers.”

Howard Archer, chief UK and European economist for IHS Global Insight, expects UK house prices to increase by around 6 per cent across 2016. He said: “In the near term, it is very possible that the decision to impose a 3 per cent surcharge on stamp duty on purchases of buy-to-let properties and second homes from April 2016 will lead to an increase in housing demand and exert upward pressure on prices as prospective buyers look to beat the increase.”