Property prices in London are increasing at a rate described as “unsustainable” by experts.
The latest Rightmove house price index shows how the average asking price of a home in the capital surged by more than £50,000 last month.
Rightmove said the average asking price in London rose to £544,232 in October from £493,748 in September – an increase of more than 10%. Across England and Wales, the rise over the month was a more modest 2.8% to £252,418.
Miles Shipside, Rightmove director and housing market analyst, said: “Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3% over August and September.
“However, this month’s rebound in the number of sellers brings the quarterly growth figure back into line with the recent trend at around 2% a month. Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare. Unsurprisingly, many of this month’s best performers are boroughs in inner London.”
Rightmove said that to satisfy at least some of the demand, London needs an increase in supply from a combination of more new-build properties and more existing owners coming to market. The number of sellers in the capital this month is up 15% compared to last, though given that September was 12% down on August, the recovery is modest and from a low base. The situation is exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to shortages and creating upwards price pressure.
“London is a world city where overseas investors see real estate as a safe asset, at a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one and two bedroom flats to meet that demand,” said Shipside, “While they can achieve volume sales at premium prices, this eats up a much needed source of fresh supply and drags up existing property prices at an even faster rate.”