The latest data from internet property portal Rightmove shows that average London house prices have eclipsed £600,000 for the first time in history. In property expert Simon Morris’ opinion, house prices in London could keep on climbing throughout 2015.
The London house price boom
The UK housing market is on the up. Data from the Office for National Statistics’ (ONS) House Price Index shows that the average UK house price rose 9.6% in the year to March 2015. What’s interesting is that if you remove London and the South East from this equation, the average UK house price only increased 8.1% from March 2014 to March 2015.
London is the beating heart of the UK housing market. The Greater London Authority’s London Housing Market Report shows that the average house price in the UK capital shot up by 11% from the third quarter of 2013 to the third quarter of 2014.
London house price eclipses £600,000
The average London house price has kept growing since the third quarter of 2014. Then it stood at £498,000; now, according to new data from Rightmove, the average house price in the UK’s economic heart is a staggering £613,922.
This is the first time that the average London residential property value has ever risen above £600,000; representing a 5.8% increase from a year ago. According to City A.M Lucian Cook, a director at estate agent Savills, partially attributed this historic rise to the lack of housing in the UK capital. Cook said that “there is no doubt that London is woefully under-supplied, and this will prevent any significant price falls.”
Lack of house builders in London
Former UK-rate setter and current board member of major builder Taylor Wimpey, Dame Kate Barker, also attributed the increase to a lack of house builders.
She commented that “when the (2008 financial) crisis struck, a lot of small and medium sized house builders went out of business.” Barker elaborated by saying that “it’s not a very easy industry to enter due to regulation; it’s hard to see that small and medium sized sector coming back.”
Investing in London’s housing market
This could mean that despite new Tory government’s pledge 275,000 homes by 2020, London’s housing market will remain under-supplied in the near future. A lack of supply could increase demand and facilitate further house price rises in the UK’s capital city.
This may be good news for you if you’re looking to enter the London property game. If you secure a London residential property for under £500,000, you could capitalise on the city’s booming housing market. However if you choose to take this route, Simon Morris would advise that you do your research and seek independent financial advice to give yourself the best chance of generating significant returns from investing in your capital into London’s residential property sector.