However, new properties coming to the market have only increased by 15-20% during the same period. This has led to significant price rises across all property types and across the whole of London.
Transaction levels in London, as published by the Land Registry and which have remained fairly static at c. 90,000 during the last three years (2010 to 2012), are likely to increase this year by 15-20% to over 105,000. This is still significantly less than 2006/7 when transaction levels peaked at over 160,000.
Based on our own data, selling prices in London have now increased on average by 16% since the peak of 2007, despite having fallen dramatically in 2008/9.
There are many factors contributing to the exceptionally buoyant London market at present. In addition to foreign investment, which so far has been more prevalent in central London, we still have low interest rates, an easing of mortgage lending criteria and the government’s Help to Buy scheme. This is all set against a backdrop of an increasing air of confidence in the economy in general.
This set of circumstances is helping to release five years of pent-up demand from owner-occupiers and a significant upturn in buy-to-let investors coming into the market.
While these factors persist, I believe we will see the past year’s level of activity continue throughout 2014, although with a much stronger first half than 2013, resulting in further upward pressure on both asking and selling prices.
Overall I believe we will see a further increase in property values of between 7% and 10% by the end of 2014, with transaction numbers in London increasing by a similar level to 115,000 (2013: forecast 105,000).