London house prices hit £497,948 average in May as UK nears record high

The average price for a property in London in May 2021 was £497,948, according to the latest house price index by the Office for National Statistics (ONS). This was a £3,262 decrease from April’s average of £501,210.

London remains to be the most expensive place to buy a property in the UK but for the sixth consecutive month also continues to be the region with the lowest annual growth (5.2%). Average prices increased by 5.2% over the year to May, down from 5.3% in April. 

Across the UK average house prices increased by 10% over the year to May, this was up from 9.6% in April, ONS said. After dipping in April, UK average house prices saw a slight monthly increase (0.9%) in the month to May to £254,624 – nearly returning to the record UK average house price, £255,913, seen in March.

Average house prices increased over the year in England to £271,000 (9.7%), in Wales to £184,000 (13.3%), in Scotland to £171,000 (12.1%) and in Northern Ireland to £149,000 (6.0%). 

Sam Beckett, ONS head of economic statistics, said: “House prices grew 10% in the year to May, continuing the trend seen in recent months. Once again, it’s property prices in London that are showing the lowest annual growth, with the North West of England showing the strongest.”

What the experts say about the latest UK house price data

Jamie Durham, economist at PwC: “UK house prices continued to perform strongly in May 2021, with prices increasing by 10.0% year on year. London continues to be the region with the slowest growth, with prices up 5.2% in the last year, reflecting the affordability challenge with the average property in the capital costing nearly twice as much as the UK average. Stamp duty is not the only factor pushing prices up. The market continues to be supported by a shift in preferences towards more spacious properties. While the price of an average detached house increased 11.3% over the last year, flats only increased by 6.5%. The market has also been supported by household savings during the pandemic, estimated to be around £7,800 per adult, and continued low interest rates. We expect that these forces will support price growth over the coming months, though at a lower rate that we have seen in the first half of 2021. Our latest modelling suggests prices could increase by 5-7% on average this year, which is significantly above recent years, and could rise by up to 4% next year.”

Nitesh Patel, strategic economist at Yorkshire Building Society: “The appetite for larger homes continues unabated, with the price of detached homes growing by 11.3% compared to 6.5% for flats over the same period. Demand is strongest in areas of better affordability – namely the northern areas, where the average house price is significantly less than the UK average. Even once the [stamp duty] tax break is removed in autumn, we do not anticipate activity and price growth to slow in response. Demand still exceeds supply.”

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