London housing market becoming disconnected from UK

House prices in London are at their highest for 4 years, property website Hometrack has said.

Across the country, the headline rate of house price growth continues to accelerate. Average house prices grew by 0.8% in March and the year on year rate growth now stands at 6.7% - the highest since June 2003.

But London continues to distort the headline figure Hometrack added. A robust London housing market appears disconnected from the rest of the country where the impetus for price growth is far more subdued.

Average house prices in London grew by 1.8% over March, the largest monthly increase in the capital for over 4 years.

Last year levels of growth were being driven by the high value, prime housing markets of central London, but looking at the first three months of this year, house price growth has picked up in London’s suburbs where demand is being driven by the need for family housing.

The London effect is now beginning to ripple out to the commuter areas around the capital with average house price growth in East Anglia and the South East standing at 0.8%.

Away from those markets influenced by the London economy, house prices remain largely subdued, with house price growth across the remaining seven regions of the country ranging from just 0% in Wales to 0.3% in the South West.