London house prices steam ahead of rest of country

Jan 3, 2013

Foreign buyers keeping capital property prices buoyant include worried Greeks and Arabs

HOUSE prices in London rose by seven per cent last year making the average home in the city cost £365,000, according to the BBC. The steep rise in London, unseen elsewhere in the country, helped boost the UK's average price rise to 1.1 per cent based on figures to the end of October provided by the Land Registry. The average British home is now worth £161,000.

There was a wide price variation between London districts, however. In Kensington & Chelsea, property deal prices rose 16 per cent. The average Kensington home now costs £1.1 million but in Barking & Dagenham in London's East End the average price was £215,000.

The startling price rises in prime areas of the capital are being put down to an influx of foreign cash. Groups from overseas investing in London include wealthy Greeks fearing their country could crash out of the Euro and buyers from the Middle East nervous after the so-called Arab Spring.

Separate figures from Moneyfacts also show the number of mortgages being offered going up. But lenders continue to be fussy, with 67 per cent of home loans requiring a deposit of 20 per cent. Only three per cent of mortgages are offered with a deposit of five per cent or less.

Peter Rollings, of estate agent Marsh & Parsons, said: "Recent improvements in mortgage lending, combined with rising national house prices, point towards a more positive end to the year and start to 2013."

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