Posts tagged ‘London’
London house prices are rising at double the rate of those in the rest of the UK as different factors drive the capital’s property market.
The typical cost of a home in London soared by 17 per cent during the year to the end of April, according to the Land Registry.
But the next highest level of growth was just 7.8 per cent in the East, while in the North East and Wales prices edged ahead by just 2.9 per cent and 3 per cent respectively.
The London property market has traditionally led the rest of the UK, with housing market recoveries and booms typically starting in the capital, before rippling out to other regions.
But the difference in price growth has now become so great that commentators are questioning whether it is still accurate to talk about the UK housing market as a whole.
House prices in London are now 25 per cent above their pre-correction peak, while in parts of prime central London they are 55 per cent higher.
But in other part of the country prices remain well down on previous levels, with property values in Wales and the North East still 15 per cent lower than they were before the correction.
Matthew Pointon, property economist at Capital Economics, pointed out that the dynamics driving the London market were very different to those in the rest of Britain.
He said: “The London economy is outperforming the rest of the UK and there is a lot of migration coming in.
“The supply and demand is even tighter in London than the rest of the country and there is the problem of foreign demand as well.”
He added: “I don’t think it has ever been accurate to lump [London and the rest of the UK] all together.”
Foreign demand is having a significant impact on the London market, with overseas buyers snapping up properties in the capital.
By contrast in the rest of the UK, first-time buyers are the driving force of the market.
Nitesh Patel, Halifax housing economist, said:“The London housing market is very different from the rest of the UK. In the prime locations of central London demand is driven by high net worth individuals many of who are cash-rich foreign buyers.
“London as a whole has a population density that is 21 times larger than the British average – 5,285 people per square km, compared to 253 per square km for the UK.”
He said the growing imbalance between housing demand and supply was adding upward pressure on the value of homes in the capital.
But in the regions, the economic recovery is only just becoming more firmly established, and has yet to lead to a significant decline in unemployment.
Ray Boulger, senior technical manager at mortgage broker John Charcol, pointed out that having such diverse property markets created a headache for policy makers.
He said: “You might in an ideal world want to have different economic policies for rest of Britain as you have for London, but Britain is in the same position as the ECB and has to have one policy for whole country area.”
Richard Sexton, director of e.surv chartered surveyors, agreed.
He said: “The distinctive market in the capital continues to cloud the waters. Outside the cash-rich London and the South East, many regions are still in the early days of the recovery.”
He pointed out that housing markets in areas like the North East and North West were far more ‘sedate’, with first time buyers playing a key role in keeping the property market aloft.
He said: “With the capital dominated by foreign investors and buy-to-let landlords, there’s been an intensifying clamour for intervention.
“But any action must be prudent, to avoid any negative impact on the more susceptible areas of the country.”
So how do you solve a problem like ‘digger’? A small JCB digger that is. Used to dig an increasing number of basements in London and the South East, the challenge is getting them out once the work is finished. Developers are turning to an alternative solution to the problem.
The development of so-called “iceberg” homes has soared across London as homeowners who seek more space have no option but to build downwards due to the capital’s planning rules that restrict building upwards.
The luxury basements often include swimming pools, cinemas and studies – and require huge amounts of building work that can only be completed with a small digger.
The difficulty is getting the machine out again as the digger often has to go so deep into the earth that it is unable to drive out again.
Developers would often use a large crane to scoop up the digger from the large hole, but now they are no longer bothering with this approach. Instead, they are simply buried in the ground with a layer of concrete.
One developer has suggested that as many as 1,000 diggers may now be buried in London.
Ed Smith explains in the New Statesman: “A new solution emerged: simply bury the digger in its own hole. Given the exceptional profits of London property development, why bother with the expense and hassle of retrieving a used digger – worth only £5,000 or £6,000 – from the back of a house that would soon be sold for several million? The time and money expended on rescuing a digger were better spent moving on to the next big deal.”
“This metallic icon was a special sacrificial gesture”?
“The new method, now considered standard operating practice, is to cover the digger with ‘hardcore’, a mixture of sand and gravel. Then a layer of concrete is simply poured over the top.
“Digger? What digger? The digger has literally dug its own grave – just as the boring machines that excavated the Channel Tunnel were abandoned beneath the passage they had just created.”
He concludes by imagining an archaeological programme chancing upon the diggers many years from now: “What will the explanatory caption say? ‘Situated immediately adjacent to the heated underground swimming pool and cinema at the back of the house, no superior London address was complete without one of these highly desirable icons, sometimes nicknamed ;the Compact Cat’. This metallic icon was a special sacrificial gesture, a symbol of deep thanks to the most discussed, revered and pre-eminent god of the age, worshipped around the world: London Property.’”
Annual house price growth hit double digits for the first time in four years during April, figures showed today.
The average cost of a home rose by 10.9 per cent during the year to the end of April, the highest rate since July 2007 and the first double-digit year-on-year gain since April 2010.
Prices rose by 1.2 per cent during the month itself, leaving the typical property costing £183,577, according to Nationwide.
At the same time, figures released by the Bank of England showed mortgage lending remained strong during March, with total advances soaring 31 per cent compared with the same month of 2013 to reach £16.77bn.
Net mortgage lending, which strips out repayments and people switching lender, was £1.79bn, the highest level since January 2012.
But there were further falls in both the number and value of mortgages approved for house purchase for the second consecutive month.
A total of 67,135 loans for people buying a home were in the pipeline during March, down from 76,251 in January, but still 25 per cent up on a year earlier.
Today’s mortgage figures are likely to help calm concerns that a bubble could be building up in the property market following a run of strong data on house prices.
The slow down in mortgage approvals suggests property market activity is beginning to moderate as pent up demand that build up during the recession works it way through the system.
Today’s figures come the day after the Land Registry said house prices fell by 0.4 per cent in March, although prices were still 5.6 per cent above their level in March 2013.
Robert Gardner, Nationwide’s chief economist, said: “The introduction of Mortgage Market Review measures could have an impact on activity levels in the months ahead as the new measures bed down.
“However, underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further on the back of stronger labour market conditions and the brighter economic outlook.”
But he added that house price growth was continuing to outstrip income growth by a wide margin, and unless the supply of property accelerated significantly, affordability was likely to become stretched.
Nationwide said price growth continued to be driven by London and the South East.
House prices in London were around 20 per cent higher than their pre-crisis levels in the first quarter of the year, while across the UK as a whole values were still around 2 per cent below their peak.
Properties in London for sale:
1. Three bedroom flat in Marylebone for £7m
2. Three bedroom semi-detached house in Harrow for £409,950
3. Two bedroom flat in SW6 for £840,000
House prices rose at their fastest pace for nearly four years during March, official figures showed today.
The average cost of a home in England and Wales increased by 5.6 per cent in the year to the end of March, the highest rate of annual growth since August 2010, according to the Land Registry.
But values dipped slightly during the month itself, falling by 0.4 per cent to leave the average home costing £169,124.
The London market continued to be the main driver of growth, with house prices in the capital soaring by 12.4 per cent year-on-year to reach a new record high of £414,490.
Growth was also strong in the East, with prices rising by 7.1 per cent in the 12 months to the end of March and the South East at 6.1 per cent.
But at the other end of the scale prices fell by 1.6 per cent in Wales year-on-year and they edged ahead by just 1.8 per cent in Yorkshire and the Humber.
Five regions also reported monthly price falls, with Wales recording a drop of 4.2 per cent, followed by the North West at 1.8 per cent.
Prices also fell in the East Midlands, Yorkshire and the Humber and the South East.
On a brighter note, sales levels continued to rebound with 63,123 homes changing hands during January, the latest month for which figures are available, 46 per cent more than in January 2013. Within this total, 1,011 properties sold for £1m-plus, a 61 per cent jump year-on-year.
The number of properties that were repossessed also continued to fall, dropping by 31 per cent compared with a year earlier to stand at 979 in January.
David Brown, commercial director of LSL Property Services, said: “Price rises may have slowed slightly, but this isn’t a backwards step for the market.
“Year-on-year house price growth remains strong and buyer sentiment is high.
“In terms of volumes, the UK property market continues to show significant and sustained growth.”
There has been a run of strong data on the property market in recent weeks, as a combination of strong demand and a shortage of homes being put up for sale has driven prices higher.
But today’s figures showing a month-on-month fall are likely to ease concerns that a bubble may be building up in the market.
They follow data from the British Bankers’ Association showing that the number of mortgages approved for house purchase fell for two consecutive months during February and March.
Housing intelligence group Hometrack also recently said there were signs of growing price resistance among buyers in London, which could slow the rate of house price appreciation in the coming months.
A garage in West London is on the market for £300,000, it has been revealed.
In the latest sign of London’s property boom, the garage is valued at more than the average price of the British home.
Property in the capital has risen on average by almost 10 per cent during the past year or almost £47,000 to more than £533,000.
During the same period, the average British property has risen 5.5 per cent or almost £14,000 to nearly £260,000.
The garage is in the prestigious London area of Kensington and is nestled in a quiet mews moments from Hyde Park.
It occupies only the ground floor, covers a total of 240 square feet and has space for two cars.
Rory Penn, partner of Mayfair estate agency VanHan, said: “Parking spaces in prime central London are without doubt the most unrecognised investment opportunity. Some have risen by 100 per cent in value in just two years and this trend shows no sign of abating.
“For example, secure underground parking spaces in Knightsbridge can cost around the same as a good house in many UK postcodes.
“There is a huge lack of supply and many high-net-worth individuals living in London’s most desirable addresses require parking for their car collections or staff.
“They will often pay any price for this, due to the convenience, making them an incredible mid-term investment if you purchase and flip it on for a profit.”
Garages for sale:
1. End of terrace garage in private cul de sac in Kingston Upon Thames for £23,500
2. Garage set within a secure development on the Battersea riverside for £75,000
3. Garage in a residential road in the heart of Wandsworth for £55,000