However, the Centre for Economics and Business Research warned that in 2015, London property values will fall by 3.6%, after years of “over-performance.”
This means that, for the first time in six years, house prices outside London will outperform the capital. The CEBR predict that British property prices outside London will increase by 1.5% over 2015, compared with London’s big drop.
“Outside London, the outlook for house prices this year has improved after a few months when the market appeared to be coming off the boil,” said Nina Skero, CEBR economist and author of the report. “December’s stamp duty changes, as well as rising household incomes, are lifting prices in many parts of the UK.”
“In London, however, we expect prices to decline by 3.6%, driven by a significant weakening at the prime end of the market. A potential mansion tax, reduced overseas interest and hefty new stamp duty rates have hit demand for high value property.”
The Office for National Statistics data showed UK house prices increased by 8.4% in the year to January 2015, down from 9.8% in the year to December 2014.
House price annual inflation was 8.5% in England, 4.9% in Wales, 7.8% in Scotland and 7.3% in Northern Ireland.
The average UK house price, excluding London, in January 2015 was £208,000. Meanwhile, the average London house price stood at £510,000.