Research shows that in the past 8 years prime Central London house
prices have more than doubled and it is up by 116% outpacing the RPI by
86%, according to this recent article on September 11th, 2013 of the
Property Wire.
Prime
central London house prices have more than doubled in the past eight
years, up by 116 and outpacing the Retail Price Index by 86%, new
research shows.
By contrast the average UK property price is 19.3% down on the same
period, according to the research from Savills which tracks the
expansion of the market since its indices were launched in 1979 and
analyses in detail the performance of different locations in the latest
market cycle.
It shows that prime central London property prices have grown on
average 4.9% per annum since 1979. This compares to just 3.6% above
inflation across greater London and a UK average of 2.9%, opening the
gap between prime London and the rest to its widest ever.
Mayfair
tops the growth chart with growth of 139% since the middle of 2005,
followed by Knightsbridge, Belgravia and Chelsea with growth of at least
128%. All are now at least 30% above peak.
The analysis points
out that supply has failed to keep pace with demand, resulting in an
expansion of prime London from its Belgravia core in the 1950s to a
swathe that runs from Richmond in the south west to Islington in the
north, from Chiswick in the west to Canary Wharf in the east.
‘London
is seen as one of the premier world cities in which to both live and
invest. London’s economy has been put at nearly a third the size of that
of the whole of the UK. Like other global cities, London attracts
capital from around the world,’ said Yolande Barnes, head of world
residential research.
She pointed out that the demand catchment
for London housing is therefore global and the appetite for investment
remains strong. Also London is physically limited in size and by very
low levels of new supply so real house prices have risen much faster
than elsewhere.
‘London is a honey pot for wealthy real estate
buyers but many of these buyers also live and work in London. It would
seem that London’s housing market is inextricably tied with its economic
success but it has been failing for some time to increase supply at a
sufficient rate to curb price growth,’ explained Barnes.
This
means that the lack of housing supply is playing out most visibly in
London’s prime housing markets where the wealthiest home owners can
compete most effectively for space.
Looking forward, the analysis suggests that the strength of outer
London prime markets will be dictated by the creation of new wealth from
the London economy and the flows of wealth between prime markets.
The
report says that generally, over the next five years, London and the
south east are expected to lead the economic recovery in the UK. In
London, the economic growth from the all important financial and
insurance sector is likely to be on a par with the average for the
capital. The highest economic growth is forecast from the professional
scientific and technical and information and communication sectors.
‘These sectors will, like financial services before them, also
attract international investment and human capital which is expected to
be reflected in overseas demand for housing. This is likely to widen the
profile of buyers and support underlying housing demand for prime
property beyond central London,’ it points out.
It also suggests
that an increased proportion of prime demand is likely to be focused on
the commuter zone given the gap between pricing in these markets and
prime domestic London.
‘We expect to see a continued displacement
of wealth from the prime central London markets into other parts of
prime London and beyond. The markets in closest proximity to prime
central London will see continued overseas buying activity, mainly from
full time residents in the capital. This means the prime central London
and other prime markets will remain linked,’ adds the report.
Article Source: http://www.propertywire.com/news/europe/london-prime-property-analysis-201309118224.html
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