On average, London prices, since 2000 have increased by 7% year on year, so that's throughout a boom and a crash. The highest increase year on year was 29% which happened in April 2000. Outside of London, since 2000, property prices in most areas have increased by around 6% per year, again throughout a boom and crash. The highest increases year on year were 42.7% which happened in Liverpool, in July 2004!
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Whats a bubble?
Well this is classed as a time when prices are increasing at an 'unsustainable rate'. In other words, properties are being sold at artificially high prices, and something is going to happen which will burst the bubble and bring them down.
In 2007, this included:-
But in 2014 things are very different:-
There is also five years of pent up demand - and buyers who have saved far more than would have done in a normal market, so it's not a massive surprise that there is so much demand in London while prices are being seen to rise.
But this excess demand is short term - it is likely to last a year or so, perhaps even slowing by the end of 2014.
So in reality, things are VERY different in 2014 versus 2007 and the Evening Standard article doesn't explain any of these differences.
And when you look back in history, the price increases related to a bubble were 30% plus year on year, so we are no where near these kind of levels.
Does this mean these price rises are sustainable?
No it doesn't, but it does mean the rise in prices is unsustainable, which is very different to there being a bubble. Price increases in London are expected to slow down come 2016/2017 to around 3%, away from the current 5-10% we are seeing.
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