House prices rose by 13.5% in the capital over the year to February, bringing the average price to £530,368, according to the latest official data.
Meanwhile, property prices in England and Wales rose by 6.1% annually taking the average price to £190,275.
On a monthly basis, house prices in England and Wales were down by 0.2%, according to the Land Registry’s February 2016 House Price Index.
The only other region to show double-digit rises was the South East, which saw house prices go up by 10.9% annually, with an average property price of £267,235. The East of England was not far behind, with price rises of 9.8% over the year and an average property price of £220,188.
The North East was the only area to see a drop in house prices over the year to February 2015, with prices down by -3.2%. This area also saw the largest monthly price drop, with prices down by 1.2%. In contrast, the North West witnessed the greatest monthly growth, with a rise of 1.8%.
Prime London areas such as Kensington & Chelsea and Hammersmith & Fulham showed a slowing down, with annual rises of just 5.6% and 7.3%. This contrasts with outer London areas, where Hillingdon had the biggest annual rise of 17.1%, followed by Havering (16.9%) and Lewisham (16.3%).
Million pound properties on the rise
There are now more property millionaires, with a 2% rise in homes in England and Wales selling for more than £1 million. The number is up from 1,052 in February 2015 to 1,077 a year later.
The Land Registry’s data – which is based on completed transactions¬ – also reveals that the number of repossessions fell by 50%, from 706 to 356, in the year to December 2015. In London, there was a drop of 67% in the number of repossession sales.
‘Demand is strong and supply is weak’
Commenting on the data, Mark Posniak, managing director at Dragonfly Property Finance, says: “With its double-digit price growth over the past year, the unique property microclimate of London and the South East is once again in evidence.
“With the exception of the East of England, the difference between the south-east corner of England and all the other regions is as pronounced as ever.
“With the London market where it is, the South East is well positioned for further outperformance in the short to medium term as buyers shift their focus beyond the capital.
“Property investors, both overseas and domestic, are increasingly looking for capital growth and yield potential outside London.
“There will naturally be a degree of uncertainty around Brexit, but the sense we are getting is that, however things turn out, it won't be a Black Swan for the UK's property market.
“With demand still strong and supply as weak as it is, the overall trajectory of the market is likely to be up.”
Richard Sexton, director of chartered surveyor e.surv, adds: “London may be leading the way, but the South East is catching up, alongside the East of the country – creating a corner of formidable property price growth.
“While encouraging anyone selling a home in these areas, this is also a potential obstacle for some buyers. Savings are struggling and government initiatives like the Lifetime Isa are still a drop in the ocean when it comes to building a deposit.
“It’s in the North East that first-time buyers are most likely to get value for money – and most likely to get a foot on the property ladder. It is a fact that imbalances in the UK’s property market are becoming ever starker.”