The prospects of first time buyers being able to afford a home in central London are going to become even more remote than they already are according to a recent analysis of the housing situation in the capital. The study throws some light on why property prices continue to go up steadily in London while in the rest of the UK they are falling.
A Chartered Surveyors monthly survey discover that more than 20% of surveyors are reporting price cuts as opposed to rises. During mid 2012 London was the only UK city to report an increase in property prices.
This trend is likely to continue, and a 19% gain in real estate prices in London is expected over the coming five years, but only 6% in the rest of the UK. Land Registry figures suggest that average house costs in the capital will soar from £350,000 today to £430,000 by the year 2017, while outside London they will creep up from £160,000 to around £170,000.
The reason for these figures is a severe lack of new properties being built in the capital – despite a large number of available sites for housing development, and that’s is pretty easy to sell a house fast in London. There are 2,250 sites in London that have been deemed suitable for housing, which could provide for half a million new homes – more than adequate to meet the current demand for housing and population growth. It is expected that just 600 of the sites will be built on between 2013 and 2017, with home creation at around 13,000 units each year, which is 35% below mayor Boris Johnson’s minimum target.
The failure to build inspite of ever soaring house prices is down to the banks. Finance for builders is not forthcoming and lower income buyers can no longer get mortgages.
The shortfall in housing could be even higher than anticipated if migration into London increases the number of residents.