London home prices jumped the most in 27 years in the second quarter as Nationwide Building Society warned that Bank of England measures to cool the U.K. property market won’t stem further gains in the short term.
Values in the capital surged 26 percent in the three months through June from the same period a year earlier, the biggest increase since 1987, Britain’s third-largest mortgage lender said in a statement. At an average 400,404 pounds ($686,700), prices in the city stand 30 percent above their 2007 peak.
On top of improving economic growth and record-low borrowing costs, demand for housing in London is being fueled by cash-rich buyers and foreign investors. While moves by the BOE last week to prevent Britain’s property market from overheating are unlikely to have a significant impact in the near term, the rate of increases in London may have topped out, according to Robert Gardner, Nationwide’s chief economist.
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