Property prices in capital soar 40 per cent above credit crunch slump
04-11-2014
London property: Bouncing back from the credit crunch
Benedict Moore-Bridger
Jonathan Prynn, Consumer Business Editor
Property prices in London have bounced back by more than 40 per cent from the worst days of the credit crunch, new figures show.
In April 2009, property values reached their lowest point following the global crash that led to the collapse of financial institutions, bank bailouts and plummeting stock markets.
But new research shows how far the recovery has come. Land Registry statistics show that across London, prices have risen 41 per cent on average, from £292,977 at the 2009 nadir to £414,356 now. Kensington and Chelsea is the best performer, with average prices up 76 per cent, from an average £703,259 five years ago to £1,236,605 today.
According to the figures, compiled by estate agent Savills, values in Hackney, jumped 71 per cent from £308,811 to £528,737. Experts say it has experienced marked gentrification. Even in the borough with the smallest recovery, Havering, prices are up nearly 17 per cent from a low point of £273,625.
London prices are also 18 per cent higher than the peak price recorded before the credit crunch. The rest of the country is still 6.4 per cent down on the pre-crash peak.
Lucien Cook, director of residential research at Savills, said foreign buyers had been the catalyst. He added: “London has led the recovery. It has been quicker to respond to improvement in sentiment in the economy — the positive sentiment has been much stronger. What has surprised us is the extent to which London has led the recovery.”
But Mr Cook said the price surge in the capital was “not sustainable”, and other areas of the country would start to catch up in the next five years.
The collapse of Lehman Brothers in 2008 had a devastating impact on a market already reeling from the failure of Northern Rock a year earlier. Interest rates fell to a historic low, helping kick-start the recovery. But some have suggested the situation in London is now turning into an unrealistic bubble.
Alex Gosling, managing director of estate agency Housesimple.co.uk, said: “London is such a hot market, properties are literally selling themselves, and in many cases well above asking price. With so few properties coming onto the market, as sellers sit and wait to see how high prices will go, there really is a rugby scrum for any up for sale.”
Homeowners are now more worried about surging prices than being caught in negative equity, according to a new survey. In a HomeOwners’ Alliance poll, 39 per cent of people said accelerating prices were the most serious issue, compared with 25 per cent who cited negative equity.
Paula Higgins, chief executive of the alliance, said: “The surge in house prices is not welcome news.Owning a home is becoming an impossible dream for young people.”
The group chief executive of Savills enjoyed a 44 per cent pay rise last year. Jeremy Helsby earned £2.6 million in pay and perks for 2013, compared with £1.8 million the previous year, according to the firm’s annual report, released this week. Underlying profits jumped 26 per cent to £55 million.