London house prices have risen 2.1 per cent in the last month, the biggest monthly increase of any UK region, according to new Rightmove research based on asking prices.
Annually, this means that the capital has seen a 6.9 per cent rise in the value of its homes to an average of £682,499.
This is despite the dual economic pressures of higher interest rates making mortgage borrowing more expensive and the cost-of-living crisis impacting household bills.
This unexpected increase is being fuelled by the middle and high-end market sectors, who are more insulated than first-time buyers from the financial fallout.
The average monthly mortgage payment for new first-time buyers putting down a 10 per cent deposit has reached £1,057, which is 40 per cent of an average gross salary for the first time since November 2012, and this could jump to £1,114 per month if lenders pass on the Bank of England’s latest 0.5 per cent interest rate increase.
“The housing market continues to be extremely resilient even in the face of the economic headwinds that are stretching household finances. The rising cost of living is increasingly playing a role in some buyers’ considerations, as they look at their budgets and what they can afford,” says Tim Bannister Rightmove’s Director of Property Science.
“First-time buyers still face the challenges of rising interest rates, saving for an increasingly large deposit, and increasing rents. Industry data shows more people are rushing to fix their mortgage rates, and following another rate rise this is likely to increase further.”
London’s top and bottom boroughs
Outer London is still seeing the highest annual growth with the borough of Havering top, boasting an average house price of £483,814, a 10.4 per cent increase compared to last year. Second was Merton which rose 10.4 per cent to £739,582 and third was Barking and Dagenham, rising 8.7 per cent to £376,815.