House prices in the capital are rising in value each year by more than their owners receive in salary, new figures show, prompting fears of a crash.
Research by Santander for the Evening Standard shows that from 2015 to 2016 property prices in London boroughs rose by an average of 11 per cent, or £46,370.
That is significantly higher than average annual pay in the capital which is £37,114. The research tells a similar story over five and 10 years.
Although estate agents argue that this shows what a sound investment London property is, some in the City warn that prices could fall.
Simon French of Panmure Gordon said: “These prices are only sustainable in a world of permanently low interest rates and low unemployment. Any sharp correction in either the credit or the labour market has the capital’s housing market vulnerable to an exceptionally painful correction.”
Earlier this week Paul Cheshire, a professor of economic geography at the London School of Economics, gave a starker warning.
He said: “We are due a significant correction in house prices. I think we are beginning to see signs that correction may be starting.”
Given the wealth of the capital, London house prices are regarded as more resilient than those in the rest of the country.
However, following last year’s Brexit vote there has been a pause in wealthy people piling into high-end properties which has caused the market to stagnate in parts of London