The average cost of a London home is expected to be £383,000 this year, which is a slower price growth when compared with last year’s property price rise, according to a study by the Centre for Economics and Business Research (CEBR). The think tank also expects the London property prices to surge by more than 30% by the end of the decade reaching the half a million figure (£500,000) by the end of this decade, in comparison with the London property prices in 2013.
London is currently enjoying emerging markets links and a relatively low reliance on the public sector. The rise in London property prices is fuelled by its bright prospects of economic growth. High rates of immigration which is expected to bring along varied talent pool, languages and international commercial links, are forecast to spur London’s economic and house price growth.
In accordance with the previous reports on house price growth in 2013, the CEBR report also predicts the ’North-South divide’ to continue. In the South East and East of England, the think tank predicts that house prices will rise by 24.8% and 25.7% respectively between 2013 and 2018. Contrarily, house prices in Northern Ireland and the North East are forecast to grow by only 6% and 2.3% over the same period.
While the rising property prices in London may bring cheer to homeowners, it spells doom for the first-time buyers who are already struggling to get onto to the bandwagon. Latest figures show that twice as many Londoners aged between 25 and 34 rent rather than buy a home. Government has introduced schemes for the first-time buyers to help them get onto the property ladder, namely, First Buy and New Buy. Through these schemes, 90-95% mortgages are available on new homes built by participating developers.