House prices in London to surge by nearly a quarter in just five years, report predicts
02-28-2014
Price hike: Growth will be fuelled by 'super suburbs', the report said
Robin de Peyer
London's booming property market will see house prices rise by almost a quarter in the next five years, forecasters predicted today.
Inner London boroughs will see a growth of 23.1 per cent, and prices in other areas of the capital will rise by 22.7 per cent, according to a five year outlook published by estate agents Savills.
The report said 2014 would be the year of the "super suburbs" between central London and the commuter belts, as growth there continues at a faster pace than inner London and the home counties.
Sophie Chick, a residential market analyst at Savills, said: "The gap between prime central London and its prime commuter markets has probably peaked and wealth has finally begun to flow out of the capital.
"We have already seen the predominantly domestic markets of outer prime London out-performing prime central London over the past year and anticipate that 2014 will be the year when the value gap between London and the lead suburbs and prime inner commuter belt finally begins to narrow.
"We expect 2014 to be the year of the super suburb," she added.
The report predicted a lull in prices in the run-up to the 2015 election amid the prospect of political fallout over a proposed mansion tax on the capital's highest-value properties.
It said house prices in central London will rise by a relatively modest three per cent in 2014, before a fall of one per cent the following year. That would represent a significant slowdown in growth, with prices in the capital surging almost 10 per cent from July 2012 to July 2013, according to figures from the Office for National Statistics.
Savills head of UK residential research Lucian Cook said: "A number of risks to the prime London markets, most particularly around Eurozone default, have receded over the past two years.
"But because the taxation of high value property is likely to be a contentious policy issue in the run-up to the 2015 general election, a lull in price growth in the period prior to polling day is expected."
The report said 2016 would see a surge of as much as eight per cent in one year alone after the uncertainty of the election has passed.
Strongest growth will be seen in south west London, the report claimed, with six per cent rises forecast for 2014 alone.