London house prices surge through the £500,000 barrier

London skyline

The average price of a London home has now surged past £500,000, according to property market data released by Rightmove. The website said May 2013 marked the fifth consecutive month of national average house price rises.

The average home in the capital is now worth £509,870, more than double the price of the national average of £249,841. Prices increased by 2.1% across England and Wales in the last month, taking the average annual house price increase to 9.1%.

Outside London, prices in every area monitored by Rightmove increased in May, with particularly strong results in the north and East Anglia, with respective rises in May of 4.2% to £152,689 and 4% to £233,447. The south west experienced the lowest increase, of just 0.6%.

Annual price changes are a different story, however, with house prices in Yorkshire & Humberside and the East Midlands all down on last year's figure. The average price in Yorkshire & Humberside is now £158,020, down 1.1% since May 2012; while house prices in the East Midlands are down 0.6% to £166,991.

Miles Shipside, Rightmove director and housing market analyst, said: "Despite a national record, it's not 'green-shoots of recovery' across the board, especially for the deposit-strapped mass-market. They must wait patiently until January when the Help to Buy scheme extends to the resale market, unless new homes developers can increase building dramatically this year."

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Cherry picking

Mortgage lenders are 'cherry-picking' who they want to lend to, Rightmove says. The government's Funding for Lending scheme means lenders are now offering cheaper mortgage rates - but only to those with a bigger deposit.

In his March 2013 Budget, chancellor George Osborne sought to offer those struggling to get on the property leader a helping hand with the launch of Help to Buy.

Under the scheme, which starts in January 2014, the government will lend buyers a loan of up to 20% of the home's value, as long as they can put down a deposit of 5%.

However, in an interview with Sky News's Dermot Murnaghan on 19 May 2013, governor of the Bank of England Sir Mervyn King said "there is no place in the long run for a scheme of this kind."

He added: "This scheme is a little too close for comfort to a general scheme to guarantee mortgages. We do not want what the United States have, which is a government-guaranteed mortgage market, and they are desperately trying to find a way out of that position."