why is property so deer in london and will prices contuine to raise?

Answer 1

the answer is alot more complicated than it first appears.

first, prices rise in nominal terms ie a house costs £100 one year and £120 the next, thus house prices have risen in nominal terms by 20%.

Not bad you think, but when you take inflation into account you get a different answer.
using the same example, if inflation was rampaging at 30% per annum, then actually house prices haven't gone up in 'real' terms, actually they've fallen!

when you look at UK house prices over a long period, they tend to move in line with inflation, however we have experienced inflation busting house prices over the last five years ie 'real' price increases. this could be for several reasons.

1. natural supply and demand, ie more people buying faster than new housing stock is coming onto the market. as already stated this could be for a variety of social or infrastructure reasons.
2. central banks printing lots of money which needs to find a home ie the bank of japan was so desperate to get the economy back on it's feet they gave banks money for 0% and told them to lend it for as little as possible!!! instead of borrowing money and buying things like TVs and HiFis, the smart people borrowed this money and bought assets like houses, all over the world, thus pushing up house prices through investor demand. americans have been printing money too, that's a massive amount of money washing around the world economy looking for a home, literally! only in the last year and a half have the taps been slowly turned off and this money flow been slowed down.

so having experienced incredible inflation busting growth, probably due to global financial liquidity, which is now being reduced ie higher interest rates etc, it is likely that the good times are over and that house prices will rise gradually, say at 5% per annum. that doesn't too bad, however, if inflation is running at 3% then you are only making 2% per annum real money on your investment.
and what if inflation is actually much higher? Inflation figures are a black art practised by governments and tend to under report inflation, in which case you might actually be losing.

in the good old days of high inflation smart people borrowed as much money as they possibly could and bought the most expensive house they possibly could because they knew that while the house would go up in line with inflation, their mortgage debt wouldn't, thus inflation was paying off their loan. those were the good old days, and that's how our parents live in expansive houses that they apparently bought for peanuts.

Answer 2

Proabably because London is so over-crowded, property prices are at a premium, especially if you want to live anywhere half decent. Unfortunately prices will continue to rise for some time yet, only a recession will slow that down and all the economic indicators are showing that theres no immediate chance of that happening. Its not just London though its happening in more and more places.

Answer 3

As with every thing else its supply and demand. London is a very desirable place to live because of the transport logistics, the amount of companies and therefore jobs and of course the social attractions. It brings in a huge amount of wealth from within its own society, national income and from abroad

That has attracted a huge amount of people to flock to the area over many years to seek there fortune or just to find work, currently just over 6 million.

Prices are unlikely to drop and increases are the prospect for the foreseeable future.

Answer 4

why is property so deer in london and will prices contuine to raise?
Why is property so dear in London and will prices continue to rise?
No idea.

Answer 5

The crazy thing is that UK is run on credit we just keep borrowing money and you have to ask yourself where is this money coming from.
I have a couple of friend who are both doctors and they can't even afford to get a desent place to live and they earn good money.
I'm frightend for the youth of tomorrow.

Answer 6

that's the way things work, unfortunately. wait until 2 more decades, analysts expect prices to decrease by then as more people move off the british isles.

Answer 7

They probably will rise, and as people are forced to look elsewhere, those prices will only go up accordingly.

Answer 8

because the prices are high