The gap in average house prices between London and the rest of England and Wales has significantly widened over the past 20 years, new research shows.
Overall the research from Lloyds Bank shows that London house prices are now nearly 12 times average earnings and the private housing stock in London is worth £1.27 trillion, a rise of 529%.
Kensington and Chelsea and Westminster remain the most expensive boroughs in London but some more affordable locations have seen strong growth with Hackney recording the steepest rise in prices.
The average house price in Hackney has increased £530,700 or 702% from £75,569 in 1996 to £606,269 in 2016. This compares to the average increase of almost 450% for London and 290% in England and Wales over the same period.
Homes in Westminster have seen the next largest increase in average prices over the past 20 years, from £190,438 in 1996 to £1,424,388 in 2016, an increase of 648%, followed by Southwark with a rise of 626%.
However, the report also reveals that prices in London’s more affordable boroughs have also recorded strong price growth. Waltham Forest and Newham were among the six least expensive boroughs in 1996 but have now moved to one of the top five performing areas with house prices up 617% and 612% respectively. House prices in these areas have been boosted by the Olympic regeneration programme and improved travel links via the Dockland Light Railway and the Jubilee Line extension.
The gap in average house prices between London and the average for England and Wales has widened from a difference of £33,834 or 47% in 1996 to £299,631 or 107% in 2016. Prices are now 5.72 times the England and Wales average, in comparison to 3.34 times in 1996.
‘The last 20 years have seen substantial growth in house prices in London, especially in the most affluent areas of the City. The boom years between 1996 and 2008 saw the gap widening between house prices at the top end of the market and those in London’s inner and outer boroughs, creating two distinct markets, prime and mainstream,’ said Andrew Mason, Lloyds Bank mortgage director.
‘However, whilst those boroughs at the top end have pulled away considerably from the rest of London and the country in terms of house prices, improved transport links to the city from the outer boroughs and the 2012 Olympic Games has meant that the boroughs directly benefitting from these have seen house price growth outpace the Prime areas in recent years,’ he added.
The research also shows that 20 boroughs have seen average house prices increase by over £400,000. Kensington and Chelsea has seen the largest increase in monetary value where the average house price has grown from £297,768 to £1,857,287, an increase of £1,559,518 or 524% and equivalent of £6,498 per month.
The next best performer is Westminster where the average value has grown by £1,233,949, followed by Camden up £887,658. These three boroughs along with Hammersmith and Fulham have consistently been London’s five most expensive areas over the past 20 years.
In 1996, average house prices were under £100,000 across 64% of London’s boroughs but now average prices are more than £500,000 in 58% of boroughs.
The 10 most expensive places to live in London remain largely unchanged compared to 1996. The key exceptions are Southwark, which has moved up 10 places to ninth spot and Haringey which moved up two places to tenth. Barnet and Kingston-upon-Thames have dropped out of the top 10.