London's £100bn property boom... as last homes under £100k are snapped up
Bargain basement: a one-bedroom flat in Lord Warwick Street, Woolwich
Jonathan Prynn, Consumer Business Editor
London's homes generated more wealth than the entire New Zealand economy last year as their total value soared by in excess of £100 billion, according to new research.
Huge demand for flats and houses added £106 billion to the total worth of the capital’s increasingly precious bricks and mortar — now estimated at a record £1.24 trillion.
The vast scale of property wealth in London means the 10 wealthiest boroughs alone are valued at £609 billion, more than all the houses in Scotland, Wales and Northern Ireland combined.
The study by estate agents Savills came as it emerged that the last handful of homes in London on the market for less than £100,000 have been snapped up in recent weeks.
Despite the rapidly increasing prices, there are no signs that the city’s property bubble has burst, with buyers still massively outnumbering sellers.
Paul Smith, chief executive of agents haart, said: “London property demand is growing about eight times faster than supply, so we’ll continue to see significant price rises as long as this continues.”
The Savills study found that London homes have almost doubled in value in a decade from £662 billion in 2003 to the £1.24 trillion figure last year, when their worth went up nine per cent.
The £106 billion uplift is roughly equivalent to the output of a medium-sized economy such as New Zealand, which has a GDP of about £103 billion, Romania or Vietnam. Savills’ director of residential research, Lucian Cook, said the impact of the vast money- making machine that is the London property market will be felt further afield from the capital this year.
He said: “The equity-rich markets of London have driven the UK housing recovery. We now expect those markets that will benefit from a dump of capital earned in London to catch the next wave of recovery — places such as Elmbridge in Surrey, Brighton & Hove, Bath & north-east Somerset.”
Within London the biggest rises in value last year were seen outside the wealthiest “bulls-eye” of Westminster and Kensington and Chelsea — in boroughs highly sought-after by professionals priced out of more central areas. The biggest percentage increases were in Hackney (16.5), Waltham Forest (15.2) and Lambeth (14.5).
Kensington and Chelsea went up in value a relatively modest 8.8 per cent and Westminster by 9.5 per cent — but the combined £203.5 billion value of homes in the two boroughs is 15 per cent more than all those in Wales.
The findings came the day after it was predicted that values in Mayfair could climb to £10,000 per sq ft over the next five to 10 years, meaning a bathroom there could be worth twice as much as the average UK home
The scale of wealth tied up in London property, now seen as one of the world’s safest investments, will pile on the pressure for a mansion tax on the costliest properties. Both Labour and the Liberal Democrats have said they favour a form of new property levy that would fall largely on London. However, first time buyers continue to pour into the capital, with numbers rising 30 per cent to a six-year high in December, according to figures from LSL Property Services.
The average London first-time buyer was 32 with an annual salary of £41,616 and put down a deposit of £66,150 on a property with an average purchase price of £276,881.
LSL director David Newnes said prices are still climbing at “break-neck speed.” He added: “Buyers in London generally wait longer to get on the ladder, to give them time to climb higher in their jobs and save larger deposits.
“More house-building, particularly in and around the capital, would help to make the market more accessible. If the Government can help to reduce competition between buyers, by up-scaling the level of construction, it will help more city-based tenants realise their dreams of becoming home owners.”
London's last £100k homes
THE last handful of London homes to go on the market for less than £100,000 have been sold or are under offer, research reveals today.
Agents said a “milestone” had been reached, with flats never again likely to be valued in five figures, barring a property market collapse.
At the end of last year, just five flats were on sale for less than £100,000, four in east or south-east London and one in Barnet, although this was on a short lease.
All five now have buyers and one, a second-floor repossessed flat in Barking eventually fetched £112.500.
Property search engine Placebuzz.com found just five properties in London advertised for less than £100,000, excluding retirement properties, “shared ownership” homes and those sold at auction.
Placebuzz founder Andy Hatoum said: “This may be the last time we see properties under £100,000 being sold in the capital — well on land at least, as the only homes available in the category are houseboats.”