The True Cost Of London's £140m Apartment

It's tempting to see the story of the £140m London apartment that just sold to a Ukrainian buyer as yet more evidence of the madness in the UK housing market.

But while there is now little doubt that the London property market is in the midst of a bubble, and that the exuberance is now spreading out around the UK, the sale of the One Hyde Park apartment is, from an economic perspective, a bit of a red herring.

The reality is that the super-prime London property market - the oligarchs and hedge fund bit of it - has begun to slow considerably in the past six months.

Aerial view of One Hyde Park (in the foreground) and the Serpentine

While multimillion-pound Mayfair properties were by far and away the fastest-growing part of the housing market a year or so ago, activity has ground to a near halt more recently, due in part to a host of tax avoidance measures brought in by the Treasury.

There are exceptions. Some buyers are still desperate to invest in London whatever the cost - the clue is this buyer's nationality.

But the reality is that the super-prime market looks far less frothy now than other parts of the capital.

Prices in Kensington and Chelsea, which not all that long ago were rising by around 30% a year, are now going up at a far more leisurely 12.8%, according to the most recent Land Registry figures.

A snapshot from within the One Hyde Park site

By contrast, the four boroughs of London with house prices rising at an annual rate of more than 20% are Islington, Lambeth, Southwark and Waltham Forest.

As often happens, what started as a boom in the multimillion-pound property sector has long since transmogrified into a boom in other, less smart parts of the capital.

And the same is starting to happen around the country: the housing boom that began in London is starting to spread out throughout the rest of the UK. Prices in the East of England are now rising by 7.1%.

While this is hardly bad news - prices fell far more outside London, so won't be anywhere near dangerous levels for some time - it poses greater threats for the financial system.

A promotional photo of an apartment at the prestigious location

A collapse in prime London house prices will be difficult for some, but many of those who can afford multimillion-pound properties have enough capital to weather the storm.

Elsewhere, the rest of us are far more reliant on mortgages to finance our homebuying - and the more we're borrowing and faster house prices are rising, the greater the risk that people could find themselves in trouble.

That's why the Bank of England's deputy governor Jon Cunliffe sounded so concerned about rising prices in his speech on Thursday night. The question is what he and the rest of the institution do about it.

At this stage, the most likely eventuality is that next month the bank's Financial Policy Committee imposes new stricter limits on the so-called stress tests mortgage companies must apply to customers before granting them a loan.

That may be followed by increases in interest rates next year. Some economists fear, though, that by then the London bubble will have become a nationwide bubble waiting to burst.

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