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28. Dezember 2011     Print Print 

London house prices to grow over 20% by 2016

House prices in London will have grown 20% by the end of 2016 on top of inflation, according to BNP Paribas Real Estate. This means that between the year 2000 and 2016, house prices will have risen by over 40% in total in the Capital. In fact, London & South East growth in house prices is so dominant that by 2016 they will pull the UK average growth per annum up to 2.4% despite most other regions only forecast to grow by 1%.

In its quarterly Housing and The Economy research report, the leading international real estate adviser has teamed up with Professor Patrick Minford of Cardiff Business School (and ex-advisor to Margaret Thatcher), to record and predict growth in housing prices and look at the issues affecting the housing market across the UK.

In 2011, growth in house prices will be 1.14% across the UK, with the highest performer being London on 2.14% followed by South East on 1.4% and East Anglia with 1.38%. The resurgent in these areas is partly due to low supply driving high rents which are driving house prices.

The other regions saw modest growth in Q3 but overall will be flat across 2011 with the worst performers Scotland which saw house price growth of -1.63%, Northern Ireland on -1.12% and the East Midlands on -0.76%.

Looking to the future, growth in house prices (after inflation) will be 2.07% in 2012 for the UK, with London leading this at 3.79%, followed by the South East at 2.96%, and then the North on 2.13% and the East Midlands with 2.06%.

In 2013, house price growth looks set to dip again with 0.91% growth expected across the UK, with London seeing just 2.38% growth after inflation and most other areas seeing a small negative growth except East Midlands and East Anglia which will see marginal growth.

In 2014-2016, house price growth increases are expected across the board with the exception of Scotland which may be facing a small decrease in 2015. The UK will see 4.08% in 2014, 2.04% in 2015 and 4.21% in 2016, after inflation. Otherwise the growth is led by London in 2014 at 5.67% before evening out to between 1.5% and 3%. The South East and South West are the other regions driving house price growth.

Tim Cann, head of development and residential consulting at BNP Paribas Real Estate, comments: ‘Central and West London in particular have seen real price and rental growth over the last 18 months from international investors and occupiers from Italy, Libya, Egypt and Asia, looking for a safe haven for their money. Those areas that are not mortgage-dependent are the strongest. However, a possible post-Olympic effect of mass housing flooding some parts of the market may lead to more subdued growth in 2012 and 2013.

‘In the South East, which will see growth above inflation of 17% in the next six years, and East Anglia, with a predicted 12%, the markets are characterised by a lack of first time buyers, resistance to sales in unproven locations and an oversupply of flats in town centres. Demand is actually for family homes with good transport links and therefore those markets need to stimulate the release of mothballed housing sites in these areas.’