CBRE: Shortfall fuels London house price surge
A shortfall in new homes and strong interest from overseas investors is fuelling a surge in house prices in London as the market in the rest of the country flatlines.
The latest residential report by consultancy CBRE shows 197,000 homes have been built in the capital over the last decade, despite the city’s population growing by 850,000 over the same period.
This ‘supply and demand imbalance’ is, according to CBRE, a factor behind larger than average price increases in London. Data from the Land Registry shows prices have risen 6 per cent in London over the last year, compared to just 0.7 per cent nationally.
Jennet Siebrits, head of residential research at CBRE, said: ‘We expect the housing market to remain subdued over the Olympics period with attention firmly focused on sports rather than property.
‘While it is hard to distinguish the impact of one off events such as the Olympics and Jubilee on the housing market, it is clear that the housing market is flat with mortgage approvals edging downwards and a corresponding dip in new lending.
‘However, London is still a bright spot in the UK residential market with a lack of supply and strong interest from international buyers looking for a safe haven for their money underpinning house prices.’
CBRE also cited ‘continued strong interest’ from overseas investors as another reason for the inflation of London’s house prices.
Last month a report by think tank The Smith Institute, warned foreign investment in London’s housing market could fuel xenophobia if the cash is not channelled into affordable homes.