London House Prices Lag as UK Delivers Biggest Jump Since 2003

London is missing out on the biggest surge in UK house prices for almost 20 years.

Property prices in the capital rose 9.2% from a year ago in July, the least of any part of the country, the Office for National Statistics said Wednesday. That trailed the 15.5% gain seen across the UK as a whole, the most since 2003.

The figures were inflated by base-effects, with prices falling a year ago after a break on tax purchases was scaled back. London long has had the most expensive property in the UK, and has suffered since since Covid-19 lockdowns prompted people to seek bigger houses outside city centers where they could work from home.

The official government statistics confirm more recent surveys from mortgage lenders Halifax and Nationwide Building Society, which said price growth across the country continued into August, defying expectations for a slowdown.

Rising interest rates and a surge in living costs are weighing on the the ability of consumers to afford the seemingly inexorable surge in property prices. So far, the rally has yet to abate.

The figures today from the Land Registry reflect purchases completed and show the average property price rose by £6,000 in July to £292,000 ($338,000. The biggest increase was seen in the South West, where prices surged 20.7%.

The cost of renting a home also rose by 3.4% from a year ago, the biggest gain since records started in 2016. London had the slowest rental growth, delivering a 2.5% increase, well below the 4.5% gain in the West Midlands.