Home prices in London and Manchester rose by almost 20% to boost a nationwide hike in the first three months of 2014, adding to concerns that the UK capital might suffer a property bubble.
Data touching on all UK’s cities indicated an overall rise in prices of houses across all regions in the first quarter, although only London and the southeast have rebounded to highs observed before the economic crisis.
UK house prices increased for the 15th straight month in March alone on an annualized rate. However, the month witnessed a slowdown in the pace of growth compared with February, according to Financial Times.
London house prices increased 18% in the first three months of 2014, up from the same period a year ago. An average home was sold at 362,699 pounds at the UK capital, a price that’s more than twice the rates observed in the rest of the country without considering London.
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As reported by Bloomberg, data from UK’s Nationwide Building Society showed growth of London home prices standing at 2.6%.
Home prices in Manchester also surged 18% from one year to another.
The country’s double digit growth in home prices, which was also showed in the latest statistics from the Office for National Statistics, might raise concerns about the prospects of property bubble in London.
“We are wondering whether this level of price growth in London is sustainable. What we think is going to happen is people will start leaving London in search of better value,†said Susan Emmet of Savills, an estate agency.
Ms. Emmet attributed the rise in London home prices to newcomers such as foreign investors and first-time buyers who treated the city as a safe haven.
Nationwide Building Society said that while the growth of home prices in UK is showing possibilities of moderation, demand is still way higher than supply.
To contact the reporter of the story: Yashu Gola at yashu@forexminute.com
