London soars among widespread house price rises

House price growth was positive across all regions of the UK in the first quarter of 2014, with average house prices rising by 2.6 per cent. This figure rises to 9.2 per cent over the 12 months to 31 March.

London once again outpaced the rest of the country, according to Nationwide's quarterly house price index. With a rise of 5.3 per cent over the quarter and a whopping 18 per cent over the past year, the divide between the capital and the rest of the UK is all too clear.

'The contrast between London and the rest of the UK grows starker by the day,' says Jonathan Samuels, chief executive of Dragonfly Property Finance. 'London has almost become a country within a country.'

Alex Gosling, managing director at online estate agents, believes the figures will distress first-time buyers in the capital.

"These figures will make pretty depressing reading for first-time buyers trying to get on the ladder in London,' says Gosling. 'Nationwide says house price growth shows "tentative signs of moderation" - tell that to the thousands of Londoners priced out of the market.'

Gosling believes it is wealthy overseas buyers who continue to drive up house prices in the capital, and claims the shortage of properties in London remains at a critical level.

The London property price surge is reflected in recent sales at Marsh & Parsons.

'In January, half of all properties sold in prime London went for more than the asking price, and one in three were snapped up within two weeks of being put on the market,' says Peter Rollings, CEO at estate agent Marsh & Parsons. 'In South West London, we have 48 potential buyers registered for each available property.'

Uplift in the north

Elsewhere, the North saw the second-largest uplift, with a 3.1 per cent quarterly increase. However, the region's annual rise of just 5.4 per cent makes it the weakest-performing region over the year.

England as a whole enjoyed a rise of 2.9 per cent in the first quarter, and 10.7 per cent over the year. Scotland saw a quarterly 2.3 per cent rise, resulting in a pickup in the annual growth rate from 3.7 per cent to 7.7 per cent. And Wales increased by 1.1 per cent over the quarter.

But despite widespread growth, most regions have not so far returned to the levels they enjoyed before the economic crisis took hold in 2008.

'Although all regions saw annual house price growth in the first quarter, ten of the 13 regions have yet to surpass their pre-crisis peaks,' says Robert Gardner, Nationwide's chief economist.

London, the Outer Metropolitan and the Outer South East are the three regional exceptions, highlighting the South's continuing outperformance of the North.

'The growing North/South divide has once again been highlighted and is once again very real,' says Samuels. 'The market is increasingly splintering.'

Among individual cities, there are some clear winners. For the second quarter running, Manchester is the best performing city with hefty house price increases of 18 per cent. Brighton, Cambridge and Oxford also fare well with rises of between 13 and 14 per cent.

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