According to economic forecasters wealthy foreign buyers are responsible for the high demand for luxury property in London.
Prices are growing fastest in London at 11% in the last year to November compared to the average for UK house prices of 8.4% a year based on the Office of National Statistics (ONS) data.
One advantage for homeowners of rising house prices is the remortgage buyer can release capital for home improvements such as an extension or new kitchen.
There has been an influx of wealthy buyers in London where supply of property is limited creating runaway price rises for luxury properties.
Prices 27% higher than peak
The cost of prime London property in now 27% higher than the peak reached in 2007.
The average price of London property is expected to reach £600,000 by 2018 which would be 3.3 times the average in north-east England.
For first time buyers and home movers living in London the there is an increasing likelihood they will be priced out of the market unable to find mortgage multiples sufficient to buy in central London.
International demand has been fuelled by instability in other parts of the world as well as low returns on cash and bonds and slowing equity markets.
For people living in London the there is an increasing likelihood they will be priced out of the market unable to find mortgage multiples sufficient to buy in central London.
Higher property values for older homeowners allows the equity release buyer to access wealth using a lifetime mortgage to consolidate debt, for home improvements or holidays.
Bank of England not concerned
The Governor of the Bank of England Mark Carney is not concerned having said the rise is from a low level in the property market.
London’s property market has been responsible for increasing the average for the whole county from 3.5% to 5.4%.
The housing minister Kris Hopkins made the point that the London market has benefited from the international buyers as this has allowed developers to start building homes in what was a depressed market.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release calculator, mortgage cost calculators, and property value tracker chart.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to improve your quality of life or even reduce inheritance tax owed by your beneficiaries.
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