London now has the fastest rising property prices in the south of England as buyers return to the capital in a reversal of the “race for space” exodus seen during and after the pandemic.
Latest figures from lender Nationwide show the market rose 1.6% in the capital in the first quarter of the year compared with a decline of 2.4% in the last quarter of the 2023.
That left the average cost of a home in the capital standing at £519,505.
It means that the market in London is performing far more strongly than those in surrounding regions, such as the Outer Metropolitan area, which covers the commuter belt out to the M25, where prices were down by 0.6%.
Across the broader south-east region they fell by 1%, while they were down by 1.3% in East Anglia and 1.7% in the south west. Nationally prices were up 1% to an average of £260,791, having fallen by 2.3% in the previous quarter.
The London property market, particularly demand for flats, was the hardest hit by the trends seen during the Covid era when buyers sought more outdoor space and extra rooms that could be used as bases for home working.
That saw prices rocket in the leafy suburbs and further afield in areas such as the west country as homeowners sought to change their lifestyles. However, latest trends suggest that increasing pressure to return to the office is making buyers abandon plans for a life in the country. One survey over the weekend showed prices in Cornwall — once a favourite post-covid destination — falling by 1.3% in December.
Matt Thompson, head of sales at agents Chestertons, says: “In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. “As this wasn’t the case, the majority of these buyers have since resumed their property search. As a result, March concluded the first quarter of the year with a busy property market — particularly in the capital where demand continues to outstrip supply.”
The strongest performing English region was the North, where annual price growth picked to 4.1% in the first quarter.
Jonathan Hopper, CEO of buying agents Garrington Property Finders, said: “Two things are clear from the Nationwide’s latest snapshot of the UK’s property market. The surge in price rises seen at the start of the year is easing off, and big regional disparities remain.
“While buyer confidence is back, and the widespread price falls of last year are firmly in the rear-view mirror, price rises are still being tempered by the high cost of borrowing.”
Nationwide’s Chief Economist Robert Gardner said: “UK house prices fell by 0.2% in March, after taking account of seasonal effects. Nevertheless, the annual rate of house price growth edged higher to 1.6% in March, from 1.2% in February.
