The growth in London property prices has not seen such an ascend since 2016
Owing to a lack of supply and an increasingly growing demand as people are rushing back to the city of London to workplaces and the city’s social attractions, the property prices in the UK capital are soaring sky high.
Following the relaxing of restrictions since the dying down of the pandemic, there is a very clear housing boom throughout the nation. Nationwide Building Society has recently recorded an annual pace of 7.4% increase in London property prices in the first quarter of this year, up from 4.8% the same time last year, making it the most rapid surge rate since 2016.
Throughout the UK demand has been increasing although within London itself, the rate is slightly behind the rest of the nation. The somewhat subdued desire for housing in London is likely due to the lower migration rate, as property purchasers are looking into more room outside of the capital for investment growth. The current national average of 12.6%, with London trailing 5.2% behind, but the comparable trend is still growing at a steady and healthy pace.
“Over the last two years, there has been a loss of affection for city centres such as London,” said Emma Cox, managing director of real estate at Shawbrook Bank. “However, as the city centre opens its doors to companies and hotels… [these] hotspots are quickly becoming an appealing location” she noted.
“Over the past three months, as the economy has recovered, London has come back on the radar of purchasers,” said Tom Bill, director of UK residential research at Knight Frank. Other economic statistics also support this tendency. Rightmove research indicates that the average asking price of a London house is increasing at a pace of more than 6% per year, reversing the contraction that started in early 2021.
London’s severe supply and demand imbalance is great news for homeowners
The rising demand for housing has collided with a scarcity of London residences for sale, causing a major shortage in the market. “London’s severe supply and demand mismatch has boosted price and aggressive bidding on homes,” said Angus Dixon, director of private clients at property consultancy, INHOUSE.
The most active market is in the costliest residences, where “buyers are less susceptible to higher expenses of living and debt,” according to Alec Harragin, a director at the London surveyor firm Savills, with the demand for properties in the £1m to £2m range being the busiest sector for homes.
Despite the improvements in London, a shortage of foreign buyers continues to weigh on the capital’s property market, according to Bill from Knight Frank, who expects it to continue to underperform the national average in the next months ahead.
Many analysts predicted that affordability in London would be a long-term issue in the city. The added concerns about interest rates, the economy, and the crisis in Ukraine will also be elements that might well impact the market in the near future.