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Recent figures involving residential property values appear to be affecting the picture of house prices in the UK as a whole. Much as the commercial property conditions in the capital cannot be viewed alongside the UK-wide commercial property market, the residential situation, driven – like the commercial sector – by overseas investment, is in its own ‘bubble’.
While in the rest of the UK, property values remain fragile and far from a sure-fire vehicle for investment, London’s steadily increasing prices and unremitting demand for property is keeping the capital’s property market exceedingly healthy.
A new UK record was achieved in July of this year in terms of (residential) property transactions, up 0.3% compared with the preceding month. The cost of the average British home has reached £232,969, but looking at percentages, it’s easy to see how London can skew the image as a whole. In the first half of 2013 house prices in the UK grew by 2.6% but if we remove the London properties, the average drops to just 1%.
Like the commercial and office sector over the past few years, the absence of new properties introduced to the market has resulted in a lack of demand. In London this has kept prices buoyant in both sectors as people (domestic and overseas) remain committed to investment in the capital, while in the rest of the UK, because the situation is more complicated in the residential sector (where ultimately first-time buyers are the key to getting things moving), there has been a stalling of the market. And those first-time buyer transactions are well down overall: 250,000, down from 500,000 at their peak. At the same time, it is also believed that financing in the capital is easier to achieve given the general reliability of the ‘bubble’.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.