The average asking price of a home in London is now a record £400,096, and rising.
Property search engine Home says that London house prices are now 15.3% higher than five years ago, but with supply of property entering the market down 31% in the last year.
Doug Shephard, director of Home, which takes its data from virtually every property website in the UK, said that London’s property market is continuing to expand into “bubble territory at an alarming price”.
He also argues that between 2007 and 2011, while property prices in London fell, this was a blip rather than a true crash.
According to Home’s data, the average London property price in October 2007 stood at £347,389. At its October lowest, in 2011, it fell to £341,146.
Shephard said: "London's housing bubble has come about through ever greater sums of cash chasing ever fewer properties over the last five years.
“Soaring prices may well be welcome news for home owners who see their equity growing, but, on the flip side, they are highly troubling for potential buyers and create severe downside risk.
“The growth curve in prices over the last 12 months alone appears unsustainable, and the market metrics are not showing any signs of a slowdown in price growth.
“The over-riding concern is that further stimulation from the Help to Buy scheme will only expand the bubble even further by increasing the amount of demand in a market plagued by limited supply.
“The reality is that, based on average prices, buyers can now purchase two properties elsewhere in the UK for less than the price of a single property in London. For example, acquiring a property in the East Midlands plus one in Scotland would still leave change of over £58k, compared to the average price in the capital.
“The likelihood of a surge in new supply to help keep prices in check is very low in the near future.
“However, by their very nature, all investment bubbles pop eventually. It's just a matter of time."
But is there a house price bubble in London? Some estate agents look as though they are trying to calm things down – and the media are getting the blame.
See next story.