London homes break £300,000 barrier

Britain's biggest mortgage lender Halifax said the average price of a property in the capital was now £313,122. At the same time average house prices in the South East breached the £250,000 mark to stand at £259,904.

The group said the gains during the second quarter of the year meant the average property in London was now more expensive than the new £300,000 threshold at which inheritance tax kicks in, while someone in the South East buying an average-priced property would now have to pay stamp duty of 3% of their home's value rather than 1%.

It criticised the Government for failing to increase the thresholds for both taxes in line with house price inflation.

It said if this had happened the inheritance tax threshold would be £490,000, while the threshold at which 3% stamp started would be £720,000 not £250,000, and people would not have to pay the 4% rate until they bought a home worth £1.4 million, rather than the current £500,000.

Northern Ireland saw the strongest house price growth during the three months to the end of June, with the average cost of a home there rising by 8.5%. In Greater London prices rose by 4.9% during the period, while in the North they were 4.3% higher and in the South East they increased by 4.2%.

The growth in the North pushed house prices in the region above the £150,000 threshold for the first time to average £155,188. Scotland and Yorkshire and the Humber are now the only regions of the country where the average home still costs less than £150,000, with prices in these regions standing at £140,262 and £149,051 respectively.

But other regions saw modest falls during the second quarter of the year, with prices dropping by 2.8% in Wales, 1.1% in the West Midlands and 0.4% in the South West. Northern Ireland also saw the fastest house price growth year-on-year, with property prices soaring by nearly 47% during the 12 months to the end of June.

Halifax said the growth had been driven by a combination of a strong local economy, high levels of immigration and high demand from second homebuyers and buy-to-let investors in the Republic of Ireland.

With average property prices of £228,790, Northern Ireland is now the most expensive part of the UK to buy a house outside London and the South East. This compares with two years ago, when only Scotland had average house prices lower than Northern Ireland.