Many experts say that the rate of increase in property prices throughout London will have to stop as the market will not be able to sustain the growth.

A leading property website’s house price index highlights the problem as an average price of a home in London rocketed by over £50,000 in October. 

The research showed that the average advertised price in September was £493,748 however in October it surged to £544,232, higher than 10%.

Throughout England and Wales for the same period prices rose by no more than 2.8% to the average asking price of £252,418.

Miles Shipside, director and housing market analyst for the property website, said: “Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3% over August and September.

“However, this month’s rebound in the number of sellers brings the quarterly growth figure back into line with the recent trend at around 2% a month. Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare. Unsurprisingly, many of this month’s best performers are boroughs in inner London.”

They see that the only way that demand can ever be met is if more home-owners put their properties up for sale and if there was an increase in new-build properties. The situation is also compounded by the number of new-builds being snapped up by overseas investors and market demand forces up prices.

The number of people putting their residences up for sale in London throughout September was 12% lower than August, although this drop has been covered by the fact that in October it was 15% higher.

Shipside added :“London is a world city where overseas investors see real estate as a safe asset, at a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one and two bedroom flats to meet that demand,

 “While they can achieve volume sales at premium prices, this eats up a much needed source of fresh supply and drags up existing property prices at an even faster rate.”