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Mortgage chief warns that prime London price rises are unsustainable

Mortgage chief warns that prime London price rises are unsustainable

The outgoing chief executive of the Nationwide building society, Graham Beale, is warning that prime central London house price rises of the kind seen in recent years are simply unsustainable.

“I am not saying there is going to be a crash but at the current rate of price rises fewer and fewer people will be able to afford to buy in London” he says. 

“We lend to people who are buying in Acacia Avenue not Park Lane but it’s in Park Lane that I suspect we could see the London market start to level out” he adds.

“Nationally, house prices have been rising by between three per cent and four per cent for a number of months and that is sustainable with wages going up by around three per cent. But in London we continue to see low double-digit rises, which does not look sustainable” Beale warns.

He says much of the market in the capital is driven by cash buyers rather than mortgage borrowers - many of the former come from foreign buyers and buy to let deals. 

Beale, who has been at Nationwide for 30 years and is being succeeded by current BT Openreach chief Joe Garner next spring, says George Osborne’s stiffer tax regime on landlords may well help deter excessive investment purchases in London.

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