LONDON HOUSING MARKET

London Housing Market



Table of Contents

INTRODUCTION3

HISTORICAL ANALYSIS3

LONDON HOUSE PRICES TREND5

SUPPLY AND DEMAND IN HOUSING MARKET6

Supply and Demand7

EXISTING PROBLEMS AND FUTURE PREDICTIONS OF HOUSING MARKET DEVELOPMENT11

CONCLUSION14

REFERENCES16

BIBLIOGRAPHY18

London Housing Market

Introduction

The housing market is the overall market, where houses and other properties are bought and sold. Like any other market it can be modelled by using demand and supply analysis. When the number of houses being offered for sale at a given price matches the number of houses wanted at that price, the market is said to be in equilibrium. If demand or supply change, the equilibrium price will change, too(Power Houghton 2007 pp.110-112).

Historical analysis

Since 2006, property prices in Greater London have gone up by an average of 20.1% - far more than the 10.8% rise in England and Wales as a whole. In prime central London, they went up by 34% in the same period, according to Savills. Yet what a difference a year makes. Suggestions that the capital might prove immune to the general housing market slowdown that began elsewhere in Britain last summer are proving false.

From Crouch End to Clapham, Highgate to Hackney and Tooting to Totteridge, house prices are stagnating, with some boroughs even seeing consecutive monthly falls. What, then, is going on in London? (www.statistics.gov.uk).

Average price of new and existing homes in London (mix-adjusted)

The most recent Rightmove survey, published last week, reported an unexpected rise of 1.2% in national house prices, a response to seasonal demand - yet, in London, they went up by only 0.2%. A more detailed examination reveals that values dipped in 16 of the 32 boroughs, with some of the more expensive ones showing a sharp slowdown in annual gains. Prices in Hammersmith & Fulham, in west London, fell by 1.6%, and in Hounslow, which includes upmarket Chiswick, they dropped by 4% (www.statistics.gov.uk)..

The trend is not always clear. Asking prices in Kensington and Chelsea fell by 2.2% in April, but have risen by 0.6% this month. And, within boroughs, property types and price brackets have also performed differently (www.statistics.gov.uk).

Monthly trend in nominal mix-adjusted average house price (London and England)

The upper end of the market is also coming under pressure. Figures released last week by Primelocation, a property website that covers only the more expensive boroughs, showed the average asking price for prime London property falling for the first time this year, by 0.6% in April. This puts annualised growth at 11.7%, the lowest level since September 2006, as sellers bow to the inevitable and lower their expectations - and asking prices.

Even here, though, the picture is mixed: prices in Mayfair rose by 4.6%, and those in Hampstead Garden Suburb, north London, by 7.6%, but values in Battersea, Clapham and Wandsworth, all south of the river, fell by 1.1%, with houses faring far worse than flats. There were also drops of 1.7% in Maida Vale and Little Venice, both in west London. In Wimbledon, average prices rose by 0.7%, but three-bedroom properties fell by 5.2% ...