London property market continues to defy gravity

PUBLISHED : Monday, 15 April, 2013, 12:00am
UPDATED : Monday, 15 April, 2013, 3:43am

The British capital's real estate market powered to a seventh month of increases in March, driving values to a five-year high, data from Acadametrics shows.

The average cost of a home in England and Wales rose 0.2 per cent on the month to reach £230,078 (HK$2.7 million), Acadametrics and LSL Property Services said in a monthly report.

Outside London, prices fell 0.1 per cent on the month.

The Bank of England introduced a programme to boost lending last summer, and the report signals that access to mortgages may be easing. It also adds to evidence of the regional disparity in the British property market, with London prices rising at three times the pace of the national average.

"Sadly, the improvements in mortgage availability, prices and sales have not been spread evenly," said David Brown, a commercial director at LSL. "The market in the southeast, particularly London, is going great guns, but less affluent areas are struggling."

LSL and Acadametrics said more mortgages for first-time buyers were "key to the recovery".

While the central bank's funding for lending scheme has helped, it needed to be increased in scale, they said.

They also said the government's £3.5 billion pledge last month to help homebuyers should support the market.

Excluding London from the annual house price increase of 3 per cent would leave the average rise nationally at 0.5 per cent, they said. The 2.5 percentage-point divergence is the largest recorded since they began monitoring it in 2005.

The report also showed that home values in London rose 11.3 per cent in the past three months from the same period last year.