THE GAP between house prices in London and those in other major cities is at its widest for 20 years, according to property analysts Hometrack.
At £437,700 on average, property prices in London already cost a record of more than 12 times average earnings, having increased by 10 per cent over the last year, Hometrack said.
It said momentum in the London market was now coming from commuter belt areas such as Barking and Dagenham rather than central areas of the city.
The continued increase in prices there was likely to have a knock-on effect for other major cities, Hometrack said.
Buyers may reach a tipping point where they ditch the idea of living in or near to London completely, and instead set their sights on another city outside the capital offering better value.
This may in turn start to push up prices in these cities as more house hunters flood into these markets. Hometrack said the rise of London house prices had seen the gap between average property prices in London and those in other major regional cities widen to its greatest level for 20 years.
Someone could now buy around four typical homes in Glasgow, or three in Leeds, or two in Bristol, for the price of one in London.
In Leeds the average house price is said to be £144,200.
Hometrack said the growing price gap could also help other city regions attract new investment as investors and developers sought to expand in more affordable markets.
Richard Donnell, director of research at Hometrack, said: “London’s price/earnings ratio is at an all-time high, while there remains value in most other regional cities.
“The pricing differential to London could well assist city regions attract new investment as the cost of housing starts to influence decision making for households and businesses.” The findings come after the National Association of Estate Agents saidthe supply of homes for sale across the UK plunged to an 11-year low in August.