An analysis of the property market by Savills
"At the end of March the quarterly
Nationwide House Price Index indicated
that house prices in London had risen by
18.2% over a 12 month period, almost
double the UK average. Meanwhile, Land
Registry data indicates that price growth
hit double digit territory in 21 of the 32
London boroughs for which it produces
"In reality, London has been outperforming
the rest of the UK since the mid noughties.
According to the Nationwide, prices
are now more than double the UK level,
much higher than previous peaks in 1987
"This position has been exacerbated by the
fact that between 2001 and 2005, when the
country was playing catch up with London,
prices in the capital were still rising strongly. As a result, the balance between London
and the UK was never fully restored.
"Overall that means London is theoretically
left with less capacity for house price growth
than other markets in the medium term and
should slow significantly at the back end
of the next five year period. However, this
position is complicated by the distribution of
price growth across London since mid 2005.
"Land Registry figures tell us that prices in
Kensington and Chelsea are 134% above
their 2005 level, while those in Barking and
Dagenham have increased by just over
10%. Between these extremes there is still
a significant gap between, say, Wandsworth
(+80%) and Greenwich (+23%).
"This reflects the different drivers and
constraints in equity rich and mortgage
dependent markets. It also means that there
remains some capacity for further price
growth in some parts of London even if the
current extraordinary rates of price growth
are not sustainable."
This article is extracted by the Savills Residentail Property Quarterly Review. Read the Review in full by clicking here.
May 23, 2014