London's desperate housing shortage sent property prices surging to an all-time high last month, with the biggest increases in the suburbs.
The average home’s value shot up by £10,683 between November and December — one of the biggest monthly jumps on record — to a fresh peak of £514,097, according to the latest Land Registry data.
The dramatic acceleration after a relatively quiet year for the property market will intensify pressure on the next Mayor to get a grip on the city’s deepening housing crisis.
It comes as a leading Conservative local government grandee said London’s population could explode by a further four million to 13 million by 2050. A separate report from the London Assembly today says the problem is so acute that the new Mayor will have to ask councils in the Home Counties to house the “spillover” from the capital’s rapid population growth.
The 2.1 per cent monthly leap in values was the biggest rise seen since August 2014, while the 12.4 per cent annual rate is the fastest since last February. The hottest markets are all on the outer fringes of London, where price rises were more modest during the boom years.
The biggest year-on-year increase was in Barking and Dagenham, where the average home rose 15.3 per cent in a year to £309,760 — leaving London without a single borough where house prices are below the £300,000 mark.
Other big annual rises were recorded in outer London boroughs such as Hillingdon (15.2 per cent), Havering (12.4 per cent), Bexley (12.3 per cent) and Croydon (12.2 per cent).
By contrast, increases in expensive central areas such as Kensington and Chelsea, Westminster or Hammersmith and Fulham have only risen modestly. Rob Weaver, director of investments at homes crowdfunding firm Property Partner, said: “Buyers have been search- ing outside prime central London for more affordable housing, attracted also by regeneration in places like Woolwich and of course by Crossrail.”
There are concerns the market will get another turbo-charge after Monday when George Osborne’s Help to Buy London scheme is launched.
Stephen Smith, director of Legal & General’s mortgage arm Housing Partnerships, said: “The gulf between supply and demand is continuing to drive up competition, pushing up prices.
“Many first-time-buyers are being pushed out of the market. This lack of housing supply must be addressed before things deteriorate further.”
Other new London records showed by the Land Registry figures include the average cost of a detached house topping £900,000 for the first time.
Separate Property Partner research found that the number of homes being built across London is falling short of demand in 27 out of the 32 boroughs.
If building continues at the current rate, London will be 350,000 homes short of its needs in 10 years’ time and almost 587,000 short by 2036.
There is little respite for renters either as new government figures today showed rents rising faster than anywhere in the country, at 3.9 per cent.