London home prices now more than twice national average

A new report from Lloyds Bank has highlighted the widening gap between house prices in London and those in the rest of England and Wales.

London home
House prices in London have dramatically pulled away from those in the rest of England and Wales over the past two decades, with the average cost of a home in the capital now more than twice that in the rest of the country.Research just released by Lloyds Bank showed that, by the end of 2016, the average house price in London stood at £578,381 while, in the rest of England and Wales, the figure was £278,750.The gap was even greater in prime inner London boroughs such as Westminster, Kensington & Chelsea and the City of London, where prices were almost six times greater than the national average by the end of last year.

Widening house-price gap

Lloyds' research showed how much the price gap had grown over the past 20 years. In 1996, an average London home cost £105,266, or £33,834 more than one in the rest of England and Wales.By last December, the gap had grown to almost £300,000 with a typical home in London now costing nearly 12 times average earnings, compared with just under four times earnings in 1996. Across England and Wales, the average house-price-to-earnings ratio doubled from three-and-a-half times earnings in 1996 to more than seven times now.
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Andrew Mason, Lloyds Bank mortgage director, said, “The last 20 years have seen substantial growth in house prices in London, especially in the most affluent areas of the city. The boom years between 1996 and 2008 saw the gap widening between house prices at the top end of the market and those in London’s inner and outer boroughs.“However, whilst those boroughs at the top end have pulled away considerably from the rest of London and the country in terms of house prices, improved transport links to the city from the outer boroughs and the 2012 Olympic Games have meant that the boroughs directly benefiting from these have seen house-price growth outpace the prime areas in recent years.”This was illustrated in the borough of Hackney where the 'gentrification' of the area has seen average prices rise from £75,569 in 1996 to £606,269 in 2016 - an increase of 702 per cent.Homes in Westminster, meanwhile, increased from £190,438 in 1996 to £1,424,388 in 2016 – a rise of 648 per cent – although Kensington & Chelsea remained the most expensive borough, with an average home price of £1.8 million.But Kensington & Chelsea prices represented 'only' 11.2 times the local average salary, compared with 18.5 times in Westminster and a high of 20 times in Camden.Barking and Dagenham was reported to be London's least expensive borough, with the average home there costing £285,129, or 9.1 times average local earnings.

Confidence remains high

Despite the surge in prices, the majority of households across the UK – led by those in London – expressed confidence that the value of their homes had risen over the past month, according to the latest House Price Sentiment Index from Knight Frank and IHS Markit.February’s reading was the seventh consecutive month that the index had been in positive territory and it now stands at a new post-referendum high.For related news and features, visit our Residential Property section.Access hundreds of global services and suppliers in our Online Directory now to our Global Mobility Toolkit

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