Renewed fears over London housing market

Experts are warning that stronger curbs must be considered for the housing market amid fears that London is starting to show "bubble-like conditions".

New research by the EY Item club shows that by 2018, the average house price in London is expected to reach nearly £600,000.

There are new fears over a so-called "bubble" in the London housing market Credit: Credit: PA

That figure is some 3.5 times the average price in Northern Ireland and more than 3.3 times the average in the North East.

The report said that while the rest of the UK is returning to normality, London is showing signs of "bubble-like conditions" and policy makers should be prepared to step in.

But Andrew Goodwin, senior economic advisor to the EY ITEM Club, said that calls to scrap or alter Help to Buy were a "red herring" and doing this could choke off the housing market recovery in the rest of the UK without tackling London's particular issues.

New research on the London market shows worrying trends Credit: Credit: PA

"House prices across most of the country remain well below their pre-crisis peaks and there seems little danger of a bubble developing.

But London, which is suffering from a combination of strong demand and a lack of supply, is increasingly giving us cause for concern."

Recent figures showed that house prices in London increased at more than double the rate of the rest of the UK over last year.

London house prices reached £403,792 on average, while prices across England and Wales generally reached £167,353.