Why do London's house prices keep rising?
While house prices across the country continue to fall, London’s house prices just keep rising. The average house price in London is currently £360,000 which is £133.113 higher than the rest of the countries average house price at £226,887. In 2017, the average house price in London is expected to rocket to £434,000. This has left many people wondering why there is such a huge different between London’s house prices compared to the rest of the country. Pali have the answer.
The reason why London’s house prices keep rising has been blamed on the chronic lack of building. According to Savills Estate Agents there are 2,250 sites in London that could be developed to create 500,000 new private homes. This would be more than enough to cope with the current demand but Savills expects that only 600 of these sites will be developed in the next 5 years. The current house building figure is 13,300 a year which is ‘35% below the mayor’s minimum target’.
The reason why the 2,250 sites remain undeveloped in London is due to the banks. Development finance is not readily available from banks and mortgages for low income buyers are almost impossible to obtain. Savills Estate Agents believe that the ‘assembly of funding’ is the single largest block for builders with the second being the planning process.
This is not good news when the Office of National Statistics has predicted London’s population to rise from 1.2 million to 10 million by 2031. Savills Estate Agents believe that this population increase will affect 60% of Londoners who earn £70,000 and less. Londoners are slowly but surley being replaced by wealthy foreign investors who have snapped up 50% of all new buildings in the city centre according to Savills. A recent study by Knight Frank for the Financial Times found that foreign buyers have spent £5.2 billion on property in central London in 2011 which is £1.5 billion more than in 2010.
What are your thoughts on the increasing house prices in London and do you believe that foreign investors will eventually take over the city and Londoners will be pushed out?(0) Comments
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