The prices for housing in the capital of England are currently at an all-time rise since 1987. The average house price in the capital has exceeded the mark of £400,000. This is almost two times higher than the national average, according to The Guardian.
According to official statistics, prices in the capital of the Kingdom have increased by 25.8% during the second quarter of 2016 and the same period this year reached an average of £400.404, for the first time exceeding the level of £400 thousand. This is 30% above the previous peak that was observed in 2007 – 2008. The cost of real estate in the national average equals £188.903, while the annual rate of inflation in the real estate sector has reached 11.8% mark.
The property prices in almost all areas of London are showing a double-digit growth. For example, in the area of Lambeth in South London the property values are now 37% higher in the second quarter of 2016 than a year earlier, while in Camden, North London, they rose by as much as 36%. According to the agency’s head of Marsh & Parsons, Peter Rollings, in London there is an unprecedented demand for property and the trend of record sales is maintained. For example, according to UK high-rated conveyancing solicitors data provided by solicitors.guru, one of the largest legal platforms, for each residential facility in the south-west of London 48 buyers lay up claims on. ‘This gap between property prices in London and other regions of the country has never been that huge’, Nationwide chief economist Robert Gardner says, adding that the authorities ‘do not have the tools to solve the fundamental problems of the housing market because of the significant lack of offers’.
Statistics forced market participants to talk about the probability of occurrence of a ‘bubble’ in the market of UK property. Real estate experts believe that the price level of growth is unsustainable, warning that ‘the risk of a sudden correction in prices in the next few years is growing’.
However, it seems like the Bank of England in the nearest future is not likely to take some drastic measures in this regard in the next few years. Recently, the Bank of England announced that it will take a wait and monitor the state of affairs around the housing market, at the same time recommending banks and building companies to restrict the volume of loans and take more careful approaches to the study the credit history of borrowers.
Traditionally, in many countries, as the recovery in aggregate demand in the national economy, first of all stock prices begin to increase and with an interval of around six months, property prices start increasing, as claim analysts from EXNESS. The growth in demand for property in the UK contributes to the increase in the last two years the volume of guaranteed loans for homes by the banking sector with 0.527 billion to 1.715 billion pounds. Meanwhile, the number of permits issued for mortgage lending in the UK from January to May 2016 decreased from 71,000 to 62,000 of loans against the background taken in the last year tightening lending measures in this sector.