The Deep Strikers Site

London property continues to rise even when prices elsewhere continue going downhill or stay steady. House prices in this area continue to go up according to the Royal Institution of Chartered Surveyors. Prices run approximately 16% higher than they did during the pre-crisis peak of September 2007. Some are predicting that they will go up another 25% by 2016 because foreign investors are still looking for places to put their cash. How long can this continue though? Downward pressures are expected to increase this year.

One reason for the high prices of London property is that it remains very popular with foreign buyers. In fact, foreign investors are responsible for purchasing the most desirable residences in the area. This helps to protect the market significantly from a downturn. As these foreign investors have a great deal of money available for investing, they don’t have the same problems that the average person does when it comes to obtaining a mortgage. Another factor that plays a role is the weakness of the sterling when it comes to many currencies. It is down 20% when compared to the dollar. The same is true of interest rates which are incredibly low.

It is expected that this influx of cash into the London market will continue. In the 18 months proceeding mid-2011, approximately $9 billion flooded the London property market. What people need to remember though is that the global economic picture has a major impact on the top end of the housing market. If the global economic picture improves or the euro crisis comes to a resolution, investors may choose to put their money elsewhere. The same is true if commodity prices fall or the sterling rises.

London property is expensive. The average house costs a typical home buyer 7.8 times what he earns. The national average is 4,8 times. Yields are low as they are only 3.9% and rents are up by approximately 25% in the past two years. One thing that may have a major influence on this market though is ‘prime’ tenants. Many who fall into this category work in the financial services field. Heavy job losses are expected in this industry which could have a big impact on the market. Only time will tell where this market is going. Things could change on a dime.