|
Average London house prices
have now broken through the £200,000 barrier for the first time,
increasing fears that prices are unsustainable. Greater London is
the most expensive place in the UK to buy a house with average prices
rising by 6.65% per cent to £205,831 at the end of June from £193,004
a year earlier.
There was also a massive 77%
surge in the number of homes sold for over £1 million during the
three months to June compared to the same quarter last year - 516
homes were sold in that price bracket.
The Royal Borough of Kensington
& Chelsea remains the most expensive place in Britain to buy a home
with an average cost of £567,952, with one house in Kensington Park
Gardens on the market through FPD Savills for £85 million. (Read
more on that story here).
For the price
of an average Royal Borough property, sixteen homes could be purchased
in Blaenau Gwent in Wales.
But the boom is far from good
news for everyone - and it could be bad news for the economy. A
survey by FPD Savills suggests that as many as 800,000 households
in London cannot afford to buy a home at current entry-level prices
of £75,000 plus. And that total of households, earning less the
£20,000 a year, excludes those who are already being housed in the
social sector either by local authorities or housing associations.
Many of those people will
fall into the category of key workers like teachers and nurses or
they will be working in low-paid service industry jobs. If those
people can't afford to live in the Capital then the labour shortage
which already exists, and is hampering business activity, will get
worse.
The Mayor's recent Housing
Commission recommended building an extra 43,000 houses each year
to meet projected demand with 29,000 of them in the affordable to
those on moderate to low incomes. But FPD Savills' Director of Residential
Research, Richard Donnell, said, , "This will require London's current
housing output to be increased by a factor of three and sustained
for the next 10 years. This is simply not realistic or feasible
given the chronic lack of suitable land."
Analysts are divided as to
when the heat will come out of the London property market but with
the Bank of England cutting interest rates (read about that here)
recently and further cuts said to be on the way, the boom seems
set to continue at least for the rest of this year. That may mean
that any collapse will be all the more precipitous when it comes.
|
