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London steams ahead as property price gap widens

This gap between London and the rest of the country has become particularly pronounced in the prime housing markets according to Lucian Cook, director in the residential research department of Savills.

"Within the commuter zone, the number of buyers from London looking to buy in the country was down by a third in the first six months of 2011 compared to the same period a year earlier," he said.

"Buyers taking equity out of London have traditionally fuelled house price growth in prime regional markets. The weakness of the ripple of wealth out of the capital this year has reduced competition for prime regional property, suppressing values and in some instances resulting in a second slip in prices."

By contrast, value growth in the prime markets of London has been strong with growing numbers of domestic owners choosing to stay or reinvest in London rather than move out. Prices for family houses in prime South West London have risen by 8.9% in the past year alone.

The result is that regional property is now better value for Londoners looking for more space or a lifestyle move than it has been for a decade.

A typical four bed family home in prime south west London is now in the region of £1.325million. By contrast, an equivalent family home in the prime commuter zone just outside the M25 is around £805,000 – a saving of £520,000 compared to an equivalent figure of 190,000 five years ago.

In the outer commuter zone a similar house would average £765,000, the saving compared to prime South West London having risen from £190,000 at the end of June 2006 to £560,000 today.

"These differentials are likely to become too strong to resist for many buyers and so we expect to see the ripple effect re-establish itself next year. This year, the levels of unsold stock on the market are likely to limit price growth prospects in the prime regional market," Cook said.

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2 thoughts on “London steams ahead as property price gap widens

  1. Anna says:

    Bought in London a few years ago and we are receiving great rental return, no gaps between tenants leaving/starting and the prices have gone up thousands too. We have now sold our home in Spain and will be buying 2 more apartments in London whilst we now rent here in Spain, as London is giving us security for our families future.

  2. Pete says:

    Back in 2004 Sir Michael Lyons delivered his review for the Treasury on the relocation of London-based civil service jobs. 7 years later it has only happened in a very small way. The top end will always boom but with the current UK budget deficit seems an obvious choice to relocate civil service jobs to the cheaper regions and will help to contain prices in the lower end of the market in the south east as well as putting less pressure on the infrastructure requirement like water. If a decision was made to close Aldershot Garrison the 3000 troops could be accomodated at Catterick (helping the area) and would free up 2200 acres of land that could be sold by the MOD (helping the deficit) and potentially allowing some more affordable housing to be built.

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