Average House Prices in London

Current average house prices in London and Supply dynamics

As Hometrack figures show, in the first quarter of the year average house prices in London rose by 18 per cent in a year, with the cost of a typical home in the capital being £463,855– more than twice the average price of the rest of the UK.
According to Nationwide house price index, with annual growth rates of +13%, commutable cities to London take three of the four slots for cities with such high price increases, the others are as follows:

  1. Oxford
  2. Cambridge
  3. Brighton

As pointed out by Hometrack, the housing market recovery is being supported by, the following key factors:

  • Access to finance
  • Low interest rates
  • Demographics

Where it is supported by demographics, this is where  a higher concentration of professionals exist.

Current Residential Property Average Prices in London based on Hometrack figures

 

London Average Price Average £psf Average monthly rent Gross Yield (%) Rental Growth – 12 month (%) NHBC New build starts – 12 months
£463,855 £373 psf £1,847 4.8% 1.4 13,278

Average price = average house price over the last 6 month period from March 2013
*Average £psf = average house price over the last 6 month period from March 2013
*Average monthly rent = average rental value over the last 3 month period from March 2013
*Gross yield = calculated from average rent and average price *Rental Growth = comparison of last 3 month period to that from the previous year
*New build starts registered with the NHBC over the last 12 month period from March 2013

 

Medium-term supply of property development stock coming to London

These are some of the latest details of the current property market supply in London from Richard Balkeway the deputy mayor for housing, land and property.

-Construction orders and homes registered to be built are at an all-time high, for example the mayor is building 75,000 low cost homes to buy or rent.

-200,000 un-built consented homes in London, which three-quarters of the homes are on large multi-phase developments, often owned by traditional house builders.

-This week the mayor launches a consultation to create a new London Housing Bank, aimed at funding and speeding up major housing schemes. This is providing loans of up to £200m to developers for big schemes that already have planning consent, then these homes will be let to tenants at below market rents for a decade period, before the developers will be able to sell them and repay the loan.

To wrap it up

My personal opinion is that house prices in London will keep going up in the next year, inflation will benefit homeowners but growth will start slowing down progressively based on interest rates and access to finance. The most influential factor in the short term future of the London housing market will be the elections early next year.