London Property Prices Increase
More Than 10% In October
Average UK property prices increased by 2.8% across the country in October, however property price rises in London are going through the roof and are unsustainable, according to property portal Rightmove
London property prices increased by £50,484 (GBP) equivalent to a 10.2% increase in October, after two consecutive monthly falls in the price of properties marketed.
Property prices in the Capital had fallen by -2.8% and -1.5% in August and September respectively, and the double digit price increases reported in October has analysts worried about the volatility and sustainability of the London property market.
The huge rise in London property prices has been attributed to corresponding factors;
- Lack of supply of residential properties coming to market
- Overseas investment in new build properties by foreign property investors
October’s strong recovery means London property prices are now 5.6% or £28,852(GBP) up on July’s all-time high of £515,379 (GBP), pushing the year-on-year increase in London to +13.8% or £66,161(GBP).
Rightmove director, Miles Shipside commented: “Fewer property vendors entered the property market in the capital during the summer resulting in total price falls of 4.3% over August and September. However, this month’s rebound in the number of property vendors brings the quarterly growth figure back into line with the recent trend at around 2% a month. Although not sustainable in the longer term, there is a buying frenzy in parts of prime inner London, with available stock so low that some agents shelves are bare. Unsurprisingly, many of this month’s best performers are inner London boroughs. London is a world city where overseas investors see real estate as a safe asset, at a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one and two bedroom flats to meet that demand. While they can achieve volume sales at premium prices, this eats up a much needed source of fresh supply and drags up existing property prices at an even faster rate”.
To satisfy at least some of the demand, London needs an increase in supply from a combination of more new-build properties and more existing owners coming to market.
The number of property vendors in the capital was up 15% in October compared to September, which in turn was 12% down on August, the recovery is modest and from a low base. The prices rises are being exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to the shortage in the supply of properties coming to market and creating upwards price pressure, over inflating property prices and creating an unsustainable situation.
The rest of the UK is showing modest growth in property prices as the Rightmove infographic shows below, with property prices rising by 2.3% in East Anglia and the South East regions.
Property prices in East Midlands and the South West also increased by 4.1% and 1.7% respectively, however Wales and the West Midlands saw property prices fall by 1.7% and 3.2% respectively.
[Source: Rightmove Property Portal]
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