London house prices 'forcing people to seek alternatives'

It is becoming increasingly expensive to buy a property in London, according to research published recently.

Findings published by Hometrack revealed that house prices in the UK increased by 0.5 per cent last month.

Its figures showed that the biggest price rises are in London and the south-east, where prices are up by 4.8 per cent and 3.2 per cent respectively in six months.

The data also highlighted the fact that demand for housing grew by three per cent, while the supply of homes for sale declined by 3.5 per cent.

In fact, over the last six months demand has grown by 10.2 per cent, yet supply has declined by 0.6 per cent.

The report acknowledged that although schemes such as Help to Buy have helped homeowners to clamber onto the property ladder, proposed changes are likely to reverse that.

"While Help to Buy has boosted sentiment and increased activity, low mortgage rates have provided homeowners more buying power than at any time previously. The change to Funding for Lending is likely to result in mortgage rates drifting higher. This will scale back the potential buying power of households, which is important to keep price rises in check," the report states.

A separate report from Estate Agent Hamptons International, said rising house prices in the capital prompted people to seek out alternatives.

The analysis was backed up by another study conducted by Savills, which showed that house prices in the south-east would outpace those in London over the next five years for the first time in over ten years.

As a result, an increasing number of people are turning to renting instead. The Savills research forecast that over one million extra households will be forced into rental accommodation over the next five years.

Published 4th December, 2013

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