Rightmove: London house prices up 5%

The average asking price for property in Greater London increased by five per cent in October, according to data released today by Rightmove.co.uk.

Average asking price in the capital broke the £400,000 barrier for the first time, reaching a record of £403,637.

Annual average asking prices in London are up by 20.3 per cent.

However, the upward trend was based on a surge of higher value three-bedroom properties entering the market to beat the home information packs (Hips) deadline on September 10th, rather than a return to the boom of the previous 18 months.

Rightmove expects the average asking price to return to a lower level when Hips are introduced for two-bedroom properties, potentially spurring an increase in lower value homes on the market.

"Record price levels seen so far this year have been driven by the health of the economy in the south of the country, and the City in particular, with buyers able to afford to pay more leading to demand outstripping a limited supply," commented Miles Shipside, Rightmove commercial director.

"The latest figures are mainly a reflection of the phased introduction of Hips motivating a rush of higher value three-bedroom homes to beat the deadline and skew average price growth.

"It is not the renaissance of the London boom. The underlying trend is one of a slowing market, but one that is somewhat muddied by Hips implementation."

Despite the increases, the overall trend is one of a cooling market.

For example, a property now remains on the market for an average of 86 days – the highest October level for five years – illustrating a slowdown.

"As a major world capital, London prices should remain robust over the longer term, as demand will remain healthy. However, there will be a flatter period that is actually good for the long term health of the market as it was getting too frothy," continued Mr Shipside.

The top performing boroughs in London were Hammersmith & Fulham and Camden, where prices were up 8.8 and 6.6 per cent respectively.

In contrast Kingston-on-Thames saw prices fall by 0.5 per cent.