Government policy and foreign investors seeking a safe haven spurred a record amount of house registrations in London last year, according to new data by the National House Building Council (NHBC).
For the U.K. as a whole, home registrations increased by 28 percent in 2013 or 133,670 compared to the previous year. It marked the highest number of registrations since the economic downturn in 2007.
In the capital, 26,230 new homes were registered, a 60 percent increase on 2012 figures of 16,364, according to the NHBC report on Friday. This was the highest since electronic records began over 26 years ago, it said.
NHBC is a leading warranty and insurance provider and registrations are typically lodged with the organization shortly before work starts on a plot. NHBC Chief Executive Mike Quinton said he had seen a genuine return of confidence to the industry as builders strive to meet the growing demand for new homes.
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"Government initiatives such as Help to Buy have also contributed to registrations increasing at their fastest rate since the downturn," he said in the press release.
The second stage of the "Help to Buy" home-buyers' program was launched in October, whereby the government will guarantee part of a home-buyer's mortgage on properties worth up to£600,000 ($918,000). The scheme joined the "Funding for Lending"scheme - overseen by the Bank of England - which aimed to encourage the U.K.'s banks to lend more for housing, but was later scrapped by the central bank.
With this stimulus in place house prices have surged in the U.K. Data from the U.K.-based Nationwide building society said house prices rose at their fastest rate in over four years in December,with a rise of 1.4 percent and were 8.4 percent higher year-on-year.
With housing indicators turning increasingly positive, concerns have been raised that the U.K. housing market could be forming a bubble. High-profile critics of the program have included the former Bank of England Governor Mervyn King who called it "too close for comfort" to the U.S. mortgage guarantee schemes that some blame for triggering the financial crisis six years ago.
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Quinton, quoted in the report, said that an increase from overseas investment into the market and the capital's continued appeal as a property hot spot was also spurring construction.
Foreign investors have snapped up between 65-70 percent of the new build homes in prime London over the past two years,according to research by sales and lettings agency Chesterton Humberts.
In addition to the Chinese, Russian and Middle Eastern buyers that have previously driven the market, it said in a report back in August that Nigerians, French and Greeks, due to political strife, have also shown an interest in the market.
—By CNBC.com's Matt Clinch; Follow him on Twitter