Why London Property Prices Are So High
For those who are considering moving to London from elsewhere, the first time they see the prices of a property to buy - and of course also to rent - they can be arrested by how high they are, and quickly decide that it is impossible for them to move to London unless their work is going to help cover the costs of housing.
We all know that property prices in London are sky high, but why is this the case? The apocryphal cost of a garage in some parts of London may be enough to buy a huge mansion elsewhere in the country, but what accounts for this?
There are several factors, the major one being the old chestnut (but not less true for it) of supply and demand. There are a huge number of people living and working in London and an expanding population, and they all need somewhere to live. With house building not keeping up with demand, then this simply means there is more demand than supply, a great recipe for pushing up house prices.
Furthermore, a lot of people, when they move away from the capital, don't sell up: instead they put the property up for rent and get some very healthy income from the sky high rental rates in many parts of London. This means there is even less property on the market than usual, because if people moving still doesn't free up property as happens in most parts of the country, then when property does come up it is at even more of a premium.
Next up, there are many extremely rich people concentrated in London: stereotypically bankers who need somewhere to put their million pound bonuses, and many more well-paid workers and indeed celebrities too - this can skew prices up and up. In addition many overseas super-rich people invest in the larger London properties as, they hope, a safe place to store some of their money - and indeed this also pushes price up.
Other factors that can impact on property prices include planning restrictions, making it harder for people to expand and develop existing properties, for instance, and some property developers have been accused of only building properties for the well-to-do that they can sell for a pretty penny, with very little social housing being developed.
Since the London economy is doing very well and looks set to continue to do so, then it will always attract more and more people in search of work and a good job: pushing up demand even further.
Because the population density is high in parts of London, then you have the situation where there is literally no land left to build on in certain areas, yet more and more people who want to move to that area. Ultimately that is something that cannot be resolved - you can't build more property where there is no space available, so in those areas you have the perfect storm where yet again demand goes up and supply cannot go up, even if it wanted to: result: increasing house prices.
So there are many reasons why London house prices are so high as outlined above - whether much of this will change in the future essentially awaits to be seen.
More first-time house buying articles:
- Fixed Or Variable Rate Mortgages
- Where To Buy a House: Choosing a Location
- The Complete First Time Buyers Guide
- Will I Be Able To Get a Mortgage?
- Stamp Duty Explained