London House Price Rises Still Triple Inflation

LONDON-The gap between demand and supply for housing is closing but excess demand is still positive according to a report just released by property researcher, Hometrack. ‘The market is still very much in a boom phase,’ says Hometrack economist, John Wriglesworth, dismissing other reports that the residential sector was coming off the boil. ‘House prices still have further to rise,’ he says.

Although there is tentative evidence, according to the report, that the booming London property market is slowing down, house price inflation is still rising at nearly three times the rate of retail inflation.

Across the London boroughs there are still a number of ‘hot spots’ where house prices are continuing to rise significantly. Top of the list for July was the City of London, which saw a monthly price rise of 2.2%, bringing a total uplift of 11.5% in capital values since the start of the year. The area has seen consistently high demand for flats and maisonettes, generated by a growing number of city workers disillusioned with the poor quality of public transport and wanting to live as close to work as possible. The Boroughs of Hounslow and Newham also saw significant monthly price rises of 2.16% and 1.5%, respectively while properties are selling within four weeks as opposed to seven last summmer.

Wriglesworth notes, ‘While there are signs that house prices are moderating, there is still plenty of scope for further increases. Our current year end forecast for London remains at 9% and we predict this moderating against a backdrop of gradually rising interest rates. We do not forecast any sustained house price deflation within the foreseeable future. The market remains healthy.’