Research from online estate agent eMoov.co.uk has found that the average property in London will be worth over a million pounds by 2019, if the current housing boom continues.
According to the Office of National Statistics, the price of a typical London property has sky-rocketed by 17% over the last year or so, meaning that an average house in London would now set you back around £459,000.
If this boom continues at its current rate, then the value of a typical London home will increase by £109,000 every year for the next five years – that works out at just under three times the average salary of a London resident.
Although this news will be warmly greeted by current homeowners in London, this is going to be a huge problem for first time buyers and those looking to get their foot on the property ladder. Salaries are not increasing at the same rate as house prices, so it will mean less people will be able to buy their first home in the capital city.
Russell Quirk, CEO at eMoov, believes that there needs to be higher levels of regulation before the property market completely spirals out of control. He says:
“The Help to Buy scheme should be reined in and more barriers need to be put in place to negate further foreign investment in residential property,”
The research found that due to the rapid changes in property prices, buyer habits are also changing, with previously popular areas such as Westminster and Kensington now dropping down the list, with buyers unable to compete in the market.
People are now looking at properties in the outskirts of London, in areas such as Sutton and Bexley, where there has been an increase in property sales, with up to 70% of the properties selling within a month of being listed.
It is unknown how the property market will change over the next few years, but some estate agents have already seen a slow in the market, as buyers are refusing to pay such high prices.
The Royal Bank of Scotland have also announced that they will be clamping down on large mortgages, meaning that loans over £500,000 will now be restricted to try and prevent a property bubble happening in London.
Last week, Nationwide reported that property prices had risen for the 13th consecutive month, meaning that the average property price across the UK was now £368 higher than 7 years ago.
Figures from the Land Registry saw London house prices leap by 4.2% in April – the highest recorded monthly increase since the records began back in 1995. The range of property prices recorded in the UK was vastly different in April, with a £12,000 house on the market in Bishop Auckland and a £24m house up for sale in Kensington and Chelsea.
As buyers are being priced out of the London property market, they are now looking to northern regions to buy properties worth up to £3 million. This is helping the market outside of London recover, and will also help to stall the current prices in London.
Looking to start your property journey?
We have over 200 offices nationwide! Contact your local Hunters branch to see how they can help you.