08 December 2006

London property prices growing further

London house prices will end this year at the highest annual rate of growth since 2002, outperforming all UK regions, confirming the extent to which the capital’s housing market is outpricing first time buyers and creating a heaven for investors.

The new house price index shows an annual London house price inflation at 12.7% after growing steadily throughout the year from 5% last January.

According to industry experts low new housing supply is driving up prices in London and the south-east of England. The Bank of England’s two expected interest rate rises this year should help damp house price growth outside the capital, although London will be slow to adapt to any changes because of localised supply shortages that dominate the generally low housing turnover market.

Estate agencies have predicted that London property prices would continue to increase next year, boosted by large bonuses in the City and growing demand from wealthy overseas buyers.

Despite a brief slowdown in 2005, annual price growth across England and Wales has risen to 7.3% according to the latest figures available, making for a very strong property investment market overall.