News

London property is tipped to beat the rest of Britain.

The Sunday Times (Money secton) 2nd January 2005

House prices in London could beat the rest of the country this year for the first time in five years.  Property in the capital has lagged the rest of britain since 2000, but some experts are predicting a comeback this year.  In 2004, for example, prices in London went up by just 7.6%, according to Nationwide building society, compared with an average gain of 12.7% for the UK as whole and increase of almost 25% in the Northwest.  However, Nationwide predicts that prices in London will grow by 3% in 2005, compared with an average of 2% for the UK as a whole.  Alex Bannnister, group economist at the building society, point out that the trend may have already started.  The market has slowed sharply in recent months - and it is the north that has suffered most, even though it tops the league tables for 2004 as a whole.  He said: ''Housing-market activity, measured by mortgage completions , has slowed most sharply in yorshire and humberside, the East Midlands and the North.  Meanwhile, London and Scotland have experienced the smallest drop in activity.''

Nationwide says that some areas in the southeast are still vulnerable to price falls but fewer places are likely to be affected than 2004.  Bannister Sais: ''In contrast to last year, London boroughs now feature less heavily in our rundown of the most likely cold spots for 2005 - and the list includes a number of areas outside the home counties.''  FPD Savills, an Estate Agent, is also predicting that London will beat the rest of the UK.  It expects property values to go up by an average of 2% this year.  but it thinks the most expensive homes in London could enjoy growth of 6%.

Richard Donnell at FPD said: ''London tends to lead the rest of the UK, Particularly at the top end of the market.  Prices of prime property in the capital have remained static for the past three years while the national average has gone up by 75%.  ''However, we have started to see things pick up in London over the past few months.  Demand has increased as confidence has returned to the city.  We expect this trend to continue while the rest of the market slows in 2005.''

Knight Frank, another estate agent, holds a similar view.  It is predicting growth of 1% in the UK market this year and 3% in 2006.  But it believes that expensive London homes will grow by 2% and 4% respectively.  Liam Bailey at  Knight Frank Said:  ''We think that it is low priced property in the rest of the country that is most vulnerable to price drops over the next couple of years.''

Lee Grandin at Landlord Mortgages, a broker, said:  ''We expect interest to shift to the south as prices stabilise in London and the Southeast before the rest of the country.''