Although most people feel as though they can set their watch by the fact that London house prices will continue to rise, there is not the same level of optimism everywhere. With the Crossrail effect starting to kick in, there are some areas of London that are going to break out and reach new heights but this is not the same across the board. There is enough confidence in the market to say that London house prices will continue to rise but there are enough warnings to suggest that the rate of growth will be slower than it has been more close to a decade.
On the grand scheme of things, a slow growing rate of prices is still moving in the right direction, so there is not too much to be worried about. However, there is no doubt the fact that some of the values in the most expensive areas like Chelsea, Westminster and Kensington will have grabbed the attention. Property values in these areas have slid in recent times, indicating that the property market is not as resurgent as it was thought.
In all honesty, it was not really possible for the property prices to continue to sky-rocketing upwards in London. Even in an era where there is a high level of growth, there needs to be periods when the market takes a breather. For sometimes this happens for a month or a few months but it may be that there is a longer pause in the rise of average prices. In the grand scheme of things, there is not much to worry about with regards the overall trend of London house prices but depending on your status, this may be welcome or distressing news about the prices to expect in the next few months.
Supply and demand will continue to play a role in property prices
Given that supply is still not managing to keep up with demand in the UK and London property market, the basic rules of economics means that the price of property in London will continue to rise. When you have respected from the Bank of England openly predicting they expect the housing market to strengthen in the year ahead, there is still a level of optimism for London properties. There may be a reduction in the number of mortgage lending schemes that are up and running but this will impact on the buyers at the lower end of the market as opposed to the people at the higher end, which is where the rise in property prices will have an impact.
There is also a need for the Crossrail effect to be taken into consideration. While many of the areas which will be close to the new rail links have seen a growth, there will still be a positive impact on prices to follow this year. We are still 4 years away from the opening of the Crossrail link which means that there is an opportunity to get involved at a good level now. Prices will continue to rise in these areas the closer we get to the opening of the Crossrail system and of course, neighbouring and adjacent areas will see an impact as well.
As people move into the area, two things will happen. People who can make a profit from selling their existing property may decide to move out and people who would normally have moved into this area will find themselves moving out to other areas in the general district. Not only will the Crossrail system have an immediate impact on the areas of the new stations, there will be a knock-on effect on outlier areas.
It is important to treat the London property market as separate from the rest of the UK market. There are different influences and factors in play and it isn’t helpful to view it all together in one batch. There are expectations that the rate or property prices in London will still be on the rise in 2014 but it may be at a slower rate than some will hope for.