London house prices: the current state of affairs

Houses prices in some areas of the capital rose by more than five per cent in April alone. A special market report by Graham Norwood

If you want to see the housing market at its strongest, look to London - but be quick about it. While the rest of the market is showing an occasional small price rise or remains roughly static, the capital's prices are steaming ahead. The property website Rightmove, which monitors asking prices (as opposed to Hometrack's actual sale prices in the table below) , says London prices are moving up faster than anywhere else in the country. Islington asking prices rose by 5.3 per cent in April alone, Kensington and Chelsea by 5.2 per cent, Hackney and the City of Westminster by 4.7 per cent and Hammersmith and Fulham by 3.8 per cent;

Hamptons International, an estate agent specialising in selling homes at the upper end of the market, says it has two examples of London properties - one in Chelsea, the other in Kensington - that are 15 per cent more expensive now than six months ago. And research departments at estate agents Savills and Cluttons have all increased earlier predictions for price rises this year. They forecast full-year rises of nine per cent and 12 per cent for London and only slightly less for wider south-east England, while the rest of the UK is muted, with only small rises expected;

The Royal Institution of Chartered Surveyors, which assesses sentiment from individual members rather than measuring specific prices, says of London: "Expectations for three months forward are for continued growth in prices, with confidence at its strongest since mid-2002".

So why is London flying, now, and why is it not happening in the rest of the country? "The strong performance by the capital is down to an on-going mismatch between the number of homes coming to the market for sale and the growth in demand" explains Richard Donnell ,who uses estate agents' sales data to produce a monthly index for Hometrack. "London continues to be the engine for national house-price growth with values in the capital moving 1.2 per cent higher over the month and by over three per cent over the last quarter. In contrast, growth away from the south of England has totalled less than 0.5 per cent over the last three months".

Hometrack shows that the supply of homes for sale in London has grown by 14 per cent over the course of the past three months - but demand, in the shape of would-be buyers registering, has grown by more than 50 per cent.

London's price surge this year started in January in what property insiders call "prime areas" of the capital, consisting of the West End, Notting Hill, the City, Docklands, Mayfair and Belgravia. In the year to April, prices in these specific highly-expensive locations monitored by the estate agent Knight Frank rose by 13.5 per cent, the highest rate since 2001, with about half of that rise coming in the hectic first three months of 2006.

Liam Bailey, head of research at Knight Frank, says the jobs market in central London has underpinned demand for property in the prime areas.

"Although the wider UK economy slowed during 2005, there was very strong employment growth in the City - 4,900 additional jobs in 2005 and a forecast 7,100 for 2006 and 12,700 jobs in 2007 according to the Oxford Economic Forecasting consultancy. These jobs are specifically in the most lucrative areas of the financial sector" says Bailey.

But experts say the current bull housing market will not last beyond the summer. Firstly around 65 per cent of London's property transactions take place between January and late July, so business volumes fall every autumn anyway; secondly, economists predict that higher petrol and domestic fuel costs and a new wave of council tax rises will gradually restrict spending and diminish enthusiasm for moving home.

"On the supply side, estate agents are reporting increased levels as new sellers come to market - perhaps encouraged by the recent upturn in prices. But supply is still at a relatively low level and in spite of strong buyer interest, this, coupled with higher house prices choking off some demand, suggests that activity will fall towards its longer term average over the coming months" says Fionnuala Earley, Nationwide's chief economist.

In other words, as increasing numbers of buyers find London property to be unaffordable so future rises will be stemmed.

Sale-price increases in Greater London boroughs in April

* Camden 2%

* Hackney 2%

* Lambeth 1.9%

* Wandsworth 1.9%

* Haringey 1.8%

* Islington 1.8%

* Ealing 1.7%

* Southwark 1.7%

* Kensington & Chelsea 1.6%

* Lewisham 1.6%

* City of London 1.5%

* Hammersmith and Fulham 1.5%

* Merton 1.5%

* Richmond-upon-Thames 1.4%

* Kingston-upon-Thames 1.3%

* Havering 1.3%

* Barnet 1.2%

* City of Westminster 1.2%

* Barking and Dagenham 1.1%

* Tower Hamlets 1.1%

* Brent 1%

* Enfield 1%

* Croydon 0.8%

* Bromley 0.7%

* Harrow 0.7%

* Redbridge 0.7%

* Hillingdon 0.6%

* Sutton 0.6%

* Bexley 0.5%

* Hounslow 0.3%

* Waltham Forest 0.3%

* Newham 0.1%

* Greenwich 0%

Discover more property articles at Homes and Property
News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
PROMOTED VIDEO
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Sport
football
New Articles
i100... despite rising prices
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Qualified Primary Teaching Assistant

£64 - £73 per day + Competitive rates based on experience : Randstad Education...

Primary KS2 NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Primary NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Primary NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam