Date Published 09 August 2013
House prices in Greater London are set to grow by 6.9% this year, says estate agent Cluttons,
It is forecasting house price growth of 8.4%, up from its previous forecast of 5%.
Cluttons says that over the next five years, house price growth will average 3.2% annually, as the next stage of the Help to Buy scheme takes effect. Cluttons thinks there will be more buyers, but insufficient stock.
It warns that the increase in house prices will push ownership in and around London out of the reach of yet more households.
Even in London where earnings tend to grow slightly ahead of the national average, Cluttons warns it is unlikely that average earnings will keep pace with the rate of house price growth over the next two years.
In prime central London, Cluttons is now forecasting an annualised average rise of around 4% to the end of 2018.
According to Cluttons, the upturn in prices has already caused a return of bidding wars in the capital which has tempered the capacity of first-time buyers to enter the market.
It adds that greater acceptance of buy-to-let mortgages for those wishing to rent out their properties and buy or rent further from London has further reduced the availability of stock traditionally available to first-time buyers.
Cluttons also reports that rental demand in central London remains strong but individual and corporate rental budgets are subdued which is translating into RPI, nil or slightly negative rental growth.
The firm forecasts London rents to grow by 3% this year, with an annualised average of 4% per annum to the end of 2018 which is in line with long-term average earnings growth for London