Is another house price bubble just around the street corner for London?
04-28-2015
More than 30cp growth forecast for London homeowners, fuelling fears of more boom and bust unless enough homes are built
New housing volumes have been increasing and the government’s National Planning Policy Framework (NPPF) appears to helping developers to bring more sites forward for development
House prices in London to jump 30pc over the next five years after general election stagnation. Photo: Alamy
By Anna White, Property correspondent
House prices in London are set to rise more than 30pc over the next five years as a strong economic backdrop and unrelenting desire to live and invest in the UK capital will boost a property market that is currently flagging ahead of the general election.
Just 12 months after homeowners in London saw an annual house price growth rate of 20pc in the year to June, fuelling fears of a property bubble, a new report by the real estate group, CBRE, has forecasted that values in both the luxury and mainstream segments of the market, will soon out pace those across the rest of the UK.
The high-end housing market in the affluent central London boroughs has stagnated, as both buyers and sellers wait for the outcome of the government race, while the frenetic activity seen in the mainstream market over the last 18 months has also cooled.
This slowdown has been triggered by affordability concerns and the impact of last year’s Mortgage Market Review, the study found.
Mark Carney’s move to cap the number of high loan-to-value mortgages also contributed to a “softening in house price growth,” the report read.
Annual house price growth in London fell from 17.8pc for the year to the final quarter of 2014 to 12.7pc for the first three months of the year.
“The slowdown is slightly at odds with the relatively healthy underlying economic backdrop,” said Jennet Siebrits, head of residential research at CBRE. “However, the market has been experiencing a mini-boom and is now cooling off.”
Political uncertainty ahead of the general election has also hit London, particularly the upper eschelons of the market, limiting annual house price growth for the both the capital as a whole and high-end homes in central London to 5pc in 2016.
In comparison, values in the South East and East Anglia, are predicted to rise by 6pc.
For normally-priced houses and flats, prices will rise 5pc each year in 2016, 2017 and 2018, before increasing to 6pc in 2019, whereas prices in luxury London will pick up to 6pc in 2017, ahead of all other regions as well as the rest of the capital.
Both ends of the London market will see 31pc growth from 2015 - 2019, while house prices in the South East will climb 28pc over the next five years and 25pc in the South West. The value of the average home in the UK will jump 25pc with the weakest growth of any region in Scotland (20pc.)
CBRE has predicted that London’s climbing population and the continued imbalance between supply and demand in the capital, along with more relaxed lending from the banks to well-established developers, will boost the London market once the electorate has voted on 7 May.
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Momentum in the UK economy, with GDP growth expected at 2.8pc for this year, and record employment levels in Britain will also drive up values in the capital.
“We have seen increased interest from investors from China and Malaysia who have been drawn to large flagship sites such as Teddington Studios in Richmond,” Ms Siebrits said.
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However, this forecast is based on a majority Government taking power or a strong coalition being formed, it does not anticipate the possibility of a hung parliament and two elections.
Is another house price bubble just around the street corner for London?
More than 30cp growth forecast for London homeowners, fuelling fears of more boom and bust unless enough homes are built
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House prices in London are set to rise more than 30pc over the next five years as a strong economic backdrop and unrelenting desire to live and invest in the UK capital will boost a property market that is currently flagging ahead of the general election.
Just 12 months after homeowners in London saw an annual house price growth rate of 20pc in the year to June, fuelling fears of a property bubble, a new report by the real estate group, CBRE, has forecasted that values in both the luxury and mainstream segments of the market, will soon out pace those across the rest of the UK.
The high-end housing market in the affluent central London boroughs has stagnated, as both buyers and sellers wait for the outcome of the government race, while the frenetic activity seen in the mainstream market over the last 18 months has also cooled.
This slowdown has been triggered by affordability concerns and the impact of last year’s Mortgage Market Review, the study found.
Mark Carney’s move to cap the number of high loan-to-value mortgages also contributed to a “softening in house price growth,” the report read.
Annual house price growth in London fell from 17.8pc for the year to the final quarter of 2014 to 12.7pc for the first three months of the year.
“The slowdown is slightly at odds with the relatively healthy underlying economic backdrop,” said Jennet Siebrits, head of residential research at CBRE. “However, the market has been experiencing a mini-boom and is now cooling off.”
Political uncertainty ahead of the general election has also hit London, particularly the upper eschelons of the market, limiting annual house price growth for the both the capital as a whole and high-end homes in central London to 5pc in 2016.
In comparison, values in the South East and East Anglia, are predicted to rise by 6pc.
For normally-priced houses and flats, prices will rise 5pc each year in 2016, 2017 and 2018, before increasing to 6pc in 2019, whereas prices in luxury London will pick up to 6pc in 2017, ahead of all other regions as well as the rest of the capital.
Both ends of the London market will see 31pc growth from 2015 - 2019, while house prices in the South East will climb 28pc over the next five years and 25pc in the South West. The value of the average home in the UK will jump 25pc with the weakest growth of any region in Scotland (20pc.)
CBRE has predicted that London’s climbing population and the continued imbalance between supply and demand in the capital, along with more relaxed lending from the banks to well-established developers, will boost the London market once the electorate has voted on 7 May.
Momentum in the UK economy, with GDP growth expected at 2.8pc for this year, and record employment levels in Britain will also drive up values in the capital.
“We have seen increased interest from investors from China and Malaysia who have been drawn to large flagship sites such as Teddington Studios in Richmond,” Ms Siebrits said.
However, this forecast is based on a majority Government taking power or a strong coalition being formed, it does not anticipate the possibility of a hung parliament and two elections.
www.telegraph.co.uk/
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