Official data released by the Office for National Statistics (ONS) shows that house prices increased three and a half times more in London than in the rest of the country in the year to the end of April 2012.
Prices in London increased by 4.9 per cent in the period, compared to a 1.4 per cent increase seen in the rest of the UK, raising concerns that there is a two-tier property market developing in the UK with London almost operating through a separate market.
Analysts are concerned that activity in London is skewing figures across the rest of the country and painting a rosier picture than actually exists.
Ashley Alexander, managing director of MeetMyAgent.co.uk said: “If the London property market takes its foot off the pedal even for a second, the national picture will look far less rosy.”
The average house in the UK is now valued at £229,000, with homes in England costing £237,000, average prices in Scotland at £178,000, Wales at £151,000 and homes in Northern Ireland valued at an average of £129,000. Annual prices in the UK increased by their fastest rate in April since September 2011.
House prices fell by 1.1 per cent in Wales, by 0.3 per cent in Scotland over the period, and Northern Ireland registering an alarming drop of 8.1 per cent.
In England there were annual price falls in the north-west of England and Yorkshire and the Humber. Prices rose by 2.1 per cent in the south-east and by 1.6 per cent in the south-west.
The low level of transactions compared to historical numbers of home-movers is exaggerating regional trends.
Average prices in London have increased to £388,000. The south-east and the south-west of England are the only other regions in the UK where average house prices are above the UK overall average of £229,000.
Howard Archer, from IHS Global Insight said: “While the 1.1% month-on-month rise in house prices in April reported by the Office for National Statistics is more than we expected, it does not markedly change our view that house prices will trend gradually down over the coming months in the face of generally weak economic fundamentals and low consumer confidence.”
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