Official figures reveal property values in London rose 12.4% in 2015 to take the average price of home in the capital to £514,097.
The Land Registry’s House Price Index in December also shows values in London jumped 2.1% month-on-month.
The shortage of homes on the market is seen as a significant factor behind the jump in values.
Between July and October last year, there was an average of 80,691 sales per month in the whole of England and Wales. That figure was 84,517 between the same months in 2014.
And in London, just 166 homes valued over £2m were sold in October 2016 – down 21% from the year before, Land Registry data show.
Commentators are blaming the introduction of new stamp duty rates in December 2014, which increased the amount of tax purchasers of properties worth over £937,000 will pay.
The rise of property values in London was only eclipsed by Reading, where average prices jumped 17.1% in 2015.
In December last year, the average house price in England and Wales was £188,270 – a 1.2% month-on-month increase and a 6.4% rise year-on-year.
And private rents grew 2.5% in the year to December, with landlords in London increasing rents by 3.9%.
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