In London, which has led the recovery in the housing market in recent years, Nationwide said the annual rate of increase had returned to double figures, moving to 10.6% from 7.3% in the previous quarter. On a monthly basis, values increased 0.5 percent, the most since April.
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“Indeed, the capital has continued to see price growth at or above the rate in the United Kingdom overall over the past four quarters”, said Robert Gardner, Nationwide’s Chief Economist in a statement.
At £443,399, the average house price in London is more than double that seen across the United Kingdom as a whole.
Despite the strong performance there is evidence of regional divergence, with London continuing to outpace the rest of the United Kingdom, while Scotland and the North West experience small price declines.
However, at an average of £127,562, prices are still 44% below their pre-crisis peak.
United Kingdom house prices increased by 0.5% in September, with the annual pace of house price growth picking up modestly to 3.8%, from 3.2% in August according to Nationwide.
“However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability”, he added.
“Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries”.
In the West Midlands, an average house is now worth £167,185, and in the East Midlands, the average house costs £160,525.
According to Savills, prime Central London property prices are 4.6% lower year on year.
“Limited supply of houses is now providing increasing support to house prices”, said Howard Archer, chief United Kingdom and European economist at IHS Global Insight.
“We expect house prices to see solid increases over the coming months amid firm activity”, he said.
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The continued increase in prices there was likely to have a knock-on effect for other major cities, Hometrack said, as buyers may reach a tipping point where they ditch the idea of living in or near London completely, and instead set their sights on another city outside the capital offering better value.
