London house prices have hit a record high after an outstanding New Year surge. Houses in the capital exchanged hands for an average of £351,305 in Jan , topping the prior top of £351,233 in Jan 2008, according to official Land Registry figures. The new record comes after prices exploded 2.5% in January as buyers returned to the market in mobs. The spike completes an incredible three-year recovery for the London property market from an important point in spring 2009 when the Bank of England reduced interest rates 0.5%. The weak pound and world unstableness have also seen many billions of GBP flow into central London property from all over the world. Capital cities including New York and Paris have been enjoying the same resurgence. Another factor has been a lingering shortage of sellers that has squeezed prices upwards. The most important rises during the past year have been in Kensington and Fulham, up by 9.3% to a median of £964,178.
Next is Westminster, which recorded a 9.1% rise and Islington with 6.1%. Yolanda Barnes, of agents Savills, claimed: It is the newest landmark for what's been an incredible bull run for London property and fully bucking the trend of the remainder of the country due to the unique circumstances of the capital.
January's fast rise implies the average house in London rose in worth by just about £9,000, more than the monthly revenues of all but the most highly paid employees. Nonetheless some property experts warned the rise was storing up issues.
Tracy Kellett, of BDI Home Finders, asserted: The January Land Registry information is yet more evidence of how house prices continue to defy logic. In an economic situation that would have shaken global markets, housing prices are rising. Long term, house price rises like this aren't supportable. They're being held up by an acute absence of stock and traditionally low bank rates.
What's occurring is that only the best properties are selling at this time. This is naturally skewing the figures. One issue is that sellers see price rises like this and mark up their own properties accordingly, which intensifies the paralysis in the market as a whole. though the new figure sets a record in readies terms, inflation-adjusted prices are still about 15% below the pre-crash highs of 4 years back in real terms.
As international investors see housing prices down and the GBP also down, they can enjoy a double bounce. With the possibility of economic recovery towards the end of the year, there is the possibility that the Sterling could add 10% to trade in the mid 1.60 range and housing could bump another 5-10%, so strategically this is a prime time to purchase for foreign investors.
Just Wednesday the Bank of England stated that the number of mortgage approvals rose to the highest level for more than two years in January, a sign that activity in the housing market is picking up.