Gap between London property and rest of UK at historic high
Even though the UK property market as a whole has risen over the last few years, the gap between the London property market and the rest of the UK is now at an all-time high. Looking back over the 12 month period to the end of March 2014 London prices have increased by over 18% whereas the likes of the North of England have only increased by 5.9%, Northern Ireland by 5.4% and Wales by 5.2%. Even though this rate of growth cannot continue, the gap between the price of London properties and those in the rest of the UK is now approaching £200,000.
There are a number of reasons, many of which have been well documented, as to why London real estate continues to grow at such excessive rates. As more and more experts continue to suggest the London market is seriously overheating this appears to be having little impact upon buyers.
Why is London real estate so strong?
There are a number of reasons why the London real estate market continues to go from strength to strength, much of which revolves around overseas investors who see the market as something of a safe haven. The issue of immigration and population growth is also a factor which we must take into consideration because London attracts more than its fair share of immigrants.
Quote from PropertyForum.com : “British Land announces £1.3 billion London investment”
It is also worth remembering that a definite lack of supply is hampering the London market with buyers forced to bid up available properties to levels which they may not have considered in the event of a more balanced market. If we also throw in the city of London’s financial markets, which continue to attract the best brains in the financial industry, this is yet another factor which is impacting demand.
How long can this continue?
While the current boom in London property prices is headline news the fact remains that this has been a problem for many years now. To all intents and purposes London is a real estate market very separate from the rest of the UK and, as statistics show, it tends to lead the UK real estate sector up and down depending upon the financial situation at the time.
London is so important to the UK for many reasons, aside from the obvious financial sector, therefore in reality the UK authorities are not going to introduce new regulations which will decimate the market. Indeed the way forward may be to introduce new regulations and schemes to boost house purchases outside of the capital with particular focus on affordable properties. However, when you bear in mind that supply has lagged demand in the UK property market for some time now, there is an awful lot of catching up to do!
Conclusion
News that the average London property is now approaching £200,000 more expensive than the average property outside of the capital is alarming to say the least. This is a situation which has been allowed to continue for many years and in reality it is not something which can be resolved overnight. We will need to see a long-term shift in housing policy to encourage more building outside of London and perhaps make finance more affordable in local markets?
Comparing London property to the rest of the UK is literally like comparing apples and pears.