House prices 'to rise by 29% in next five years as London suburbs surge ahead'
London house prices are set to soar by almost a third over the next five years despite concerns that they are already dangerously high, a report warns today.
The capital’s apparently unstoppable property juggernaut will continue to be propelled by its status as Britain’s economic “engine room”, say agents and advisers JLL.
They expect values to carry on rising next year, although some other experts have forecast that central London prices will be depressed by interest rate rises and political uncertainty in the run-up to the general election. The report, launched today in Mayfair, says: “There are still many very good reasons to buy and invest in London.”
For the capital as a whole, prices are expected to be 29.4 per cent higher by 2019 — with the outer boroughs seeing growth of more than 30 per cent.
This is a slower rise than this year, with prices rising by more than 20 per cent in some hotspots. The suburbs will see the most dramatic rises next year, while prime central London addresses will experience slower growth, says JLL.
The report forecasts that the whole of London will have 5.5 per cent growth next year compared with 1.5 per cent in the central areas.
Adam Challis, JLL’s head of residential research, said potential buyers of more expensive properties were holding back until after the election.
Labour and the Liberal Democrats have threatened to impose extra taxes on owners of homes worth more than Ł2 million. Mr Challis also warned that London faced “a real challenge” that could threaten growth if workers in their twenties and thirties continue to be priced off the housing ladder.
He said: “At some point, you will get the straw that breaks the camel’s back and London’s economic resilience will be significantly eroded. Employers could just move where it is less expensive to operate.”
Last week, property experts warned that London house prices could “dip” in the coming months.
Nationwide’s chief economist Robert Gardner said: “A variety of indicators suggest that the market has lost momentum. The number of mortgages approved for house purchase in September was almost 20 per cent below the level at the start of the year.
“Some forward-looking indicators, such as new buyer inquiries, suggest that activity may soften further in the near term, especially in London.”