Amazingly, London’s property boom may still have years to run
It costs twice as much to live in London as the rest of the UK, according to new data on property prices. The typical London home is now worth nearly £363 000 ($604 000), versus the £180 000 national average. The average London house is now worth 20% more than its 2007 peak, while the UK as a whole has yet to surpass its pre-crisis apex. In the first quarter of this year, the rise in London home prices accelerated to a heady 18% annual rate, roughly double the national average.
How much longer can London keep this up? For a first-time buyer, the average home now costs eight times gross earnings, the highest ratio since at least 1983, according to data from the mortgage lender Nationwide. Although homebuilding is picking up, the number of new homes being built in England is still 40% below pre-crisis levels, according to Nationwide. Builders are particularly busy in the financial district of Canary Wharf, where sales of apartments have quintupled over the past two years.
The net result is that the supply of new housing in London is unlikely to meet demand for some time. For investors, London’s property market will “thrive” (ie, prices will continue to soar) for at least the next three to five years, says the real estate broker JLL. “The undersupply dynamic will not die away,” it says.
For people who actually live in the city—and don’t own their home—the rising cost of living may push them to think the unthinkable: leave London. Property prices in Manchester rose as fast as in London in the latest quarter, but even after that increase, you can still buy two Manchester homes for the price of one in the capital. – Quartz daily.