The UK housing market is being accused of evolving into another bubble with the fear of rising house prices in London expanding only to the boundaries of its counties. The average price growth in England is 3.7% (July) whereas London is 6% ahead at 9.7%, and with demand outstripping supply, most say that the prices will continue to rise and this trend will remain.
The north south divide is not uncommon in the UK housing market and is now accepted, by most, as norm for southern property prices to grow faster and to a higher peak than the north. Now, should the London property bubble be accepted as the norm too?
In many ways, London is already leagues ahead of the rest of the UK cities in areas such as employment wages and opportunities, networking and social life, together with overall economic figures. Therefore, why shouldn’t the property market in London be unique and isolated from the rest of the UK? The sooner the market and economy accepts this as the ordinary, the more efficiently and effectively we can deal with the consequences and use this as an advantage.
The Funding for Lending and Help to Buy schemes are being held responsible for the threat of a housing bubble, whereas last week they were being praised for assisting an increasing number of first time buyers into the market, as mortgage levels were recorded at an annual growth of 41%. Growth of the UK housing market has been long awaited following the financial downturn, and now with the economy and housing figures are looking up the RICS is proposing to cap it all off. Whilst it is advisable to stop the UK housing market overheating beyond control, more often than not the free market represents and determines the most suitable and beneficial processes for the economy. Too much intervention can distort the economy and result in further misjudgments being made.
Whilst the consumer price index is falling, London house prices are continuing to rise at a faster rate than the rest of the UK housing market. However, we should be reminded that the rest of the UK’s average house prices are also rising and that without the London market this may not be possible. There are two separate markets emerging from the crisis, however this doesn’t have to be a negative entity and could be interpreted and used to both markets advantage.