Property prices on the rise in London

The price of property in London is set to soar - leaving millions of people unable to buy their own home.

A lack of supply and strong demand from overseas investors is having a particularly detrimental effect in the capital, where many will be consigned to a lifetime of renting as a result, according to a Reuters poll showed.

The rise is thought to be driven by the economic recovery and low interest rates. According to a survey of 27 economists and analysts, house prices in the capital will rise another seven per cent this year.

Tony Williams, London-based independent property market analyst, told Reuters: "There will be more buyers, and at this stage the supply has not increased. There will be a lot of people thinking,`I will lock in my mortgage now'."

The findings were very similar to a report published by property website Rightmove last month.

Its findings showed that asking prices across England and Wales increased by one per cent month-on-month in January to reach an average of £243,861.

In addition, the average home has seen its value rise by £2,406 this month. In fact, the report by Rightmove showed that prices have already risen by seven per cent in London, taking the average price to £514,704.

According to the Reuters poll, house prices are currently too high. It gave a consensus rating of 6.5 on a ten-point scale, where one is very undervalued and ten is very overvalued.

Many analysts have reported that property prices are rendering London out of reach and unaffordable for most would-be buyers.

Gary Styles at GPS Economics, told Reuters: "London house-price growth is completely out of step with the rest of Britain. This dichotomy is likely to continue for the next year or so before expectations return to more sustainable levels."

Published 26th February, 2014

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