LONDON house prices have leapt by 18.2 per cent annually, widening the gap between property values in the capital and those in the rest of the UK to the largest levels on record, building society Nationwide has reported.

Across the UK, prices rose by 9.5 per cent year-on-year, which is the biggest jump in almost four years and takes the typical property value to £180,264, amid signs that the upturn in the market is gaining momentum across the country, the report for March said.

In the North, values edged up by 5.9 per cent annually, taking the average price to £119,702, making it the weakest English region for house price growth. 

Loading article content

Among England's major towns and cities, Manchester was found to be the strongest performer, with house prices up by 18 per cent annually to £211,748 on average. Sunderland was the weakest-performing, with prices edging up by 1 per cent to £139,772 typically. 

Property values rose by 0.4 per cent on the previous month across the country and are still around 3 per cent below their 2007 peak.

But the southern regions in particular are continuing to record the most rapid gains in property values, the report said.

Prices in the Outer South East areas were up by 10.1 per cent year-on-year, reaching £217,534 on average, while those in the Outer Metropolitan areas rose by 10.6 per cent to around £273,998.

The annual rate of price growth in London is the strongest seen since 2003, Nationwide said. The typical house price in the capital is £362,699 - which is one-fifth higher than its 2007 peak.

Robert Gardner, Nationwides chief economist, said: "The gap between house prices in London and the rest of the UK is the widest its ever been, both in cash and percentage terms.

"Overall, the southern regions have been outperforming for some time, with the result that house prices in London, the Outer Metropolitan and Outer South-East have now surpassed their pre-crisis peaks.

Similarly, East Anglia and the South-West are less than 5 per cent below their 2007 highs."

Concerns have been growing that a lack of supply of homes combined with strong interest from overseas investors and a fresh stream of first-time buyers into the market amid low mortgage rates and Government mortgage support schemes such as Help to Buy have been helping to pump up property prices, particularly in the capital.

Mr Gardner said the upturn in the supply side of the housing market generally continues to lag far behind, with the number of new homes being built in England still around 40% below pre-financial crisis levels.

Nationwides figures also show that prices in Northern Ireland are up by 5.4 per cent annually to reach £114,495 on average, although prices there are still around half their 2007 levels.

Prices in Wales have risen by 5.2 per cent annually to £139,911 typically, with Wales recording the weakest annual growth across the UK regions.

Property values in Scotland are 7.6 per cent higher than a year ago, at £138,386 on average, which is the strongest pace of growth seen for the nation since 2007.

Prices in the South West have jumped by 7.4 per cent year-on-year to reach £198,325 typically. In East Anglia, values rose by 9.5 per cent year-on-year to around £179,718.