Is it really that simple? We think so. There is much talk about property prices in the UK with more attention being given to central and prime central London due to their stellar performance in recent years. Comparing prices of property elsewhere in the UK with prime central London is not of much use as many factors are different. One such factor is the disposable income and wealth of investors in both markets. The question therefore is whether demand can be maintained at these levels and whether supply will increase.
It is probably easier to address the supply side of the equation. The market in London is experiencing a construction boom which will result in an increase in housing stock. Over time this will inevitably lead to the easing off of prices throughout most of the Capital. The same may not be true of most areas in prime central London which are characterised by historical and protected properties – resulting in static supply.
Considering the demand side of the equation, the expected further increase in the population of London is expected support demand levels but price increases should become more reasonable. Demand is also being driven by foreign investors. Predicting trends across this part of the market is more challenging since demand depends on financial and political stability outside the UK and is influenced by related domestic policies on foreign investment. Currently however this sector is not showing any signs of weakness.
