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London house prices were rising sharply before Brexit vote, official figures show



House prices in London were rising sharply before Britain voted to leave the EU, putting the brakes on the capital's property boom, official figures show today.

Despite jitters over Brexit, the figures show that house prices were up by 13.6 per cent in May year-on-year, a sharper increase than any other region in the country.

The weeks of uncertainty following the June 23 vote sent house prices plummeting.

In May, the most expensive borough in the country to buy in was Kensington and Chelsea, where the cost of an average house was £1.27 million.

Between April and May this year, there was a 1.5 per cent increase in house prices in the capital, with the price of an average London home standing at £472,163, according to ONS data.

The number of completed house sales in the capital had also increased signficantly to 14,783 in May 2016 compared with 9,202 in May 2015, a 60.6 per cent rise.

However, London property prices have taken a downturn since Britain voted to the leave the EU, with analysis from Rightmove suggesting average housing costs dropped by 1.2 per cent between June and July.

The ONS data lags a month behind other indexes from Halifax and Nationwide Building Society.

The official ONS data for June, the month of the Brexit vote, will be released in August.

July's stats will be made available in September. As a result, the full impact of the Brexit decision is unlikely to be reflected in its figures until then.

Analysts at the French bank Société Générale have predicted that property prices in the capital could fall by more than 30 per cent as a result of the Brexit vote, and may even halve in the most expensive parts of the city.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The ONS house price data are for May so were pre-Brexit vote. It also needs to be borne in mind that the ONS's measure of house price inflation lags many of the other measures as it is based on mortgage completions.

"Pretty solid fundamentals for house buyers - high employment, decent purchasing power and very low mortgage rates - remained a source of support for the housing market through to May while a shortage of properties has also supported house prices."

 "We suspect that house prices could fall back by up to five per cent over the second half of 2016 and there could well be another five to seven per cent drop in 2017."

The May figures also showed an overall rise in house prices across the country, driven by London and the South East.

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