London house prices 'up by 14pc in a year' but rises are slowing due to EU referendum fears

The EU referendum has caused a slow down in house price rises
Daniel Leal-Olivas/PA Wire
Joseph Watts14 June 2016

House prices in London leapt by more than 14 per cent over the last year according to official figures published today.

A new more accurate measure put the average price of a London house at more than £470,000, up almost £60,000 on the same time last year.

But despite the large jump in prices, experts said the rate of increase had slowed slightly with uncertainty caused by the EU referendum to blame.

It comes as a London MP leads a debate in parliament claiming government policy has unduly inflated prices beyond the reach of nurses, teachers and people on low incomes.

There was also a small boost to consumer purchasing power as inflation defied expectations of a small increase in May and remained stable at 0.3 per cent.

Today was the first time the government published the new UK House Price Index, which replaces two previous measures.

Under the new system London showed higher annual growth than any region, with prices increasing 14.5 per cent in the year to April.

The figure represented a slight slowing in the capital’s market with prices in the year to March having increased by more than 15 per cent.

But the average price of a house in the capital still hit £470,025 compared to £410,445 in April 2015.

The new higher average for the capital in April was also some £2,700 higher than the previous month.

In the rest of the UK average house prices hit £209,000, 8.2 per cent higher than the year before and around £1,300 more than the previous month.

Chief UK and European Economist for IHS Global Insight Howard Archer said house price growth was solid, despite a slight slow down.

He said: “The strong suspicion is that housing market activity will be pressurized in the immediate term by a combination of weakened interest from the buy-to-let and second home sectors as well as heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership.”

The local authority with the largest annual growth in the year was City of London, where prices increased by 27.3 per cent to stand at £928,000.

The most expensive borough to live in was Kensington and Chelsea, where the cost of an average house was £1.3 million.

Labour Brentford and Isleworth MP Ruth Cadbury today claimed London’s housing crisis is being inflamed by policies focused on “Middle England”.

In a speech she planned to hit out at the Government’s starter homes plan, claiming subsidies given to a small number of people to buy a home push up prices for others.

CPI inflation was stable at 0.3 per cent in May after dipping to this level in April from a 15 month high of 0.5 per cent in March.

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