London has seen a startling recover over the last couple of years. Many are talking about property bubbles as the growth year on year of property prices in double digits has frightened many into thinking we are back to the days pre-credit crunch.
However, these claims are totally over exaggerated. Latest Land Registry data (which measures ACTUAL property price changes) shows out of 33 London boroughs property prices are in some cases down by just under 2% such as in Newham, through to a 12% year on year rise in nearby Hackney. And although this sounds like an enormous rise, bear in mind since 2007 to now, Hackney has only risen by 23%, which means an average year on year rise of 3.83% (ie 23/6 years) which means even though prices have risen a lot this year, since the credit crunch they have only risen just above inflation which, on average, is 3.2% year on year. So from a ‘real’ perspective, even in Hackney property prices have just been maintained.
Areas which are yet to recover to 2007 levels include:-
Redbridge, Hillingdon, Enfield, Sutton, Havering, Bexley, Croydon, Newham andBarking
Areas recovered to 2007 levels include (0-5% average house price growth):-
Waltham Forest, Harrow, Tower Hamlets, Bromley and Greenwich
Areas already surpassed 2007 levels include:-
Kensington and Chelsea, City of Westminster, Hammersmith and Fulham, Camden, Islington, Hackney, Wandsworth, Lambeth, Southwark, Haringey, Richmond upon Thames, Merton, Brent, Ealing, Barnet, Lewisham, Hounslow, Kingston upon Thames.
Click here to see how your borough is doing versus 2007 heights
What will happen in 2014?
The likelihood is that property prices in London will continue to grow by between 3-6% throughout 2014 and from 2015 according to the main forecasters, growth rates with fall to around 1% per annum as interest rates start to rise.
Growth is expected to be a lot lower from this point onwards as the cost of servicing a mortgage rises. And with recent news of the funding for lending stopping, this may mean higher mortgage rates for 2014, slowing the London market down as long term rates of 4-7% start to bite on new borrowers, reducing demand.
What to do if you are thinking of buying in 2014?
So, if you are thinking of buying in London in 2014, bear in mind it’s worth purchasing early on in the year to get the ‘best of the stock’. But if you can’t afford to buy then, don’t panic! Property prices are likely to stop rising as much as they are now and start levelling off. As such it’s more important to buy the right property at the right price in the an an area you can afford than to rush into a purchase you may regret for fear property prices will continue to rise.
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