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London's house prices boom

10th October 2006 | back to article listings BACK    print this article PRINT

After a small summer dip, London house prices increases by one per cent in September, bringing to average price of a property in the capital to over a quarter of a million pounds, according to new research.

The August rise in interest rates did not put off buyers as demand remained high during the month and the shortage of supply has caused prices to continue their relentless climb.

With the average house price now at £250,907, homes in the UK's biggest city have gained six per cent in value since the beginning of the year, reports Haart estate agents.

Although the simple high demand/low supply formula has caused prices to rocket, the buy-to-let investor will gain heart from the knowledge that the number of first-time buyers dropped by one per cent in September and now make up less than a third of the overall market share.

This is likely to have an increase in demand for rental properties and ease the competition for houses on the bottom rung of the ladder for buy-to-let investors.

Paul Smith, chief executive of Haart, said that he expected the market to remain on its upward curve in the near future: "The autumn market looks set to be strong and we expect activity levels to increase in the run up to Christmas as people will be looking to move and get settled in time for the new year."

He qualified his assertion: "Average prices across the capital have already increased six per cent since January and we are expecting them to increase a further two per cent to eight per cent by the end of the year."

However, Global Insight, commenting on the UK market as a whole, was more cautious with its view that despite the current positive trends, the boom is likely to ease soon.

A spokesman for the financial analyst firm said: "Indeed, house prices could well see further marked increases in the very near term, given the current level of mortgage activity."

He continued: "Nevertheless, we continue to believe that house prices will ultimately be reined in by affordability constraints and will settle down into an extended period of relatively modest rises."

The capital's price rises appeared to be reasonably evenly spread across London's boroughs. Properties in the south-west remain the most expensive at an average of £285,080 but the highest increase was in north London, where houses gained 1.74 per cent in value.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3020.html. Alternatively, please see our full press release archive.

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