House prices in London have risen by more than a quarter in the last year, with some now describing the capital's property market as ‘unsustainable'.
Figures from the latest Nationwide house price index showed house prices have risen by 25.8% in London during the year to June. The average property price in London has now reached £400,404, some 30% higher than the level seen in the 2007 peak.
This rise in London meant UK-wide house prices leapt 11.5% to reach an average of £186,544. All areas posted increased house prices with Outer Metropolitan London (16.4%) and Outer South East (14.0%) showing the strongest growth after the capital itself.
Alexander Gosling, managing director of the online estate agents House Simple, said the capital was now a ‘supercharged bubble'.
"The speed of London's house price rises long since moved from the breathless to the breakneck," he said.
"But if anything shouts ‘unsustainable', it's annual price inflation of 26%. Such frothy excess hasn't been seen since the peak of the late 1980s boom.
"With prices now 30% past their 2007 peak and rising by an incredible 7.6% a quarter, the capital's property market is clearly living in its own supercharged bubble.
"It's too soon to talk of London price rises going off the boil, but the heat may finally be at maximum.
Nicholas Ayre, managing director of home buying agency Home Fusion, said buyers were increasingly concerned about paying too much for property.
"Despite house prices recording their fourteenth successive monthly increase in June, the tide is most definitely turning. Buyers are thinking twice about making such a major investment, worried about overpaying. Another growing concern is affordability, particularly with the looming threat of an interest rate rise, which is now looking increasingly likely.
"Many of those buying for cash are looking at potential growth and worried about the flattening out in the market. The question they are asking is: how long will I now have to wait to realise some growth?"
