11 graphs that explain the true insanity of London's housing market

Is there a property bubble in the capital and why are prices rising so quickly? We take a look

There is London - and then there is the rest of the country.

Yep, property in the capital is now so far removed from the rest of the UK, that it really must be considered as a market unto itself - so say estate agents.

As prices continue to increase at more than double the pace of the rest of the UK, we take a close look at just what's happening to homes in the capital:


1. London house price growth? It left the rest of the UK for dust last year

12 month percentage change in house prices (ONS)
London house prices have increased 19 times faster than those in the North-West in the year to November 2013, according to Office for National Statistics.

2. And that's nothing new...


London has been out pacing the rest of the country since 2010when prices in the rest of the UK were still dropping, prices in the capital started to shoot up

3. House prices in London are now, well, 'white hot'


As a result home values in London are far higher than the rest of the country, with the average asking price standing at an incredible £517,276, according to Rightmove. In wealthy areas, such as Kensington and Chelsea the average sale price is well over a million. The average wage of a full-time employee in London is £34,000 compared with £27,000 for the rest of the UK.

4. And just why is that? Because not enough homes are being built

(DCLG)

In part, this is because there are not enough new homes being built. The number of new homes completed in England in the 12 months to September 2013 was almost half the number in 2007.

In much of London the number of homes completed has decreased over the 12 months to September 2013, according to figures from the Department of Communities and Local Government (DCLG).

4. And, there are also more people

(London's Poverty Profile)
After decades of falling, the population in London has shot up in the ten years since 2001 - growing by 850,000 during this period alone.  

5. Also, it's not just Londoners who want to buy

Overseas investors snapped up almost one out of every two new homes that were built in central London in the two years to June 2013. Property in the capital has been seen as a safe haven for investors after the world economy crashed. 



6. And yet some of these 'investment' homes lie empty


Many rich investors simply don't want the hassle of buy to let, they just want an asset that will hold its value and, even better, become more valuable over time. This means there are even fewer places for more residents to live, helping to drive the property fever even higher.

"Properties in many areas of London are being snapped up within hours of being marketed," said

Alex Gosling, director of online estate agents Housesimple.co.uk.

"For many buyers, to secure a property they have to be prepared to pay thousands of pounds over the asking price to beat off the competition."


7. So it's become more difficult for first-time buyers


(Council of Mortgage Lenders)
Lending to first-time buyers in London is still below its 2007 peak, even though house prices have surpassed this. At 31-years-old, the average age of a first-time buyer in the capital is the highest in the country, according to Halifax.



8. Which means more people letting - and paying rising rents


(LSL Property Services)
More demand for homes to let, has pushed rental costs through the roof. London saw the steepest rent rises across the country in 2013, rising by 4.4 per cent in the year to November 2013, according to LSL Property Services.

In comparison, there was 0.8 per cent annual growth in weekly earnings over the same time period - putting pressure on the finances of tenants. The housing charity Shelter has warned that thousands of people are struggling to meet costs and even using pay day loans to cover rent.



9. Which has made buy to let become even more attractive 


(Council of Mortgage Lenders)
With more people forced to rent, buy to let becomes a more tempting prospect for people who already have a home of their own - and therefore plenty of equity for a deposit.

Adding more buyers to the market as well as reducing the pool of available property.

10. So for many in London it's 'hutch up'...

The high cost of renting has meant many Londoners have to in effect bunk-up. In many areas, a sitting room or common area has become a luxury, as each and every room is converted to fit in another person.

Richard Donnell from Hometrack recently told the Financial Times that
rather than analyse London rents by the amount of bedrooms, he now looks at the market on a “rent per bed per week” basis. 

11. Or move out of London 


And this is exactly what buyers are doing.
 “The simple mechanics of supply and demand have driven this price growth,” said , Lucian Cook, Savills UK head of residential research.

“Those priced out are looking to emerging prime markets, while others have begun to re-look at the prime suburbs and commuter towns.”


Holland Park; £19.5million guide price
A seven-bedroom and eight-bathroom Victorian villa complete with a swimming pool. Strutt & Parker... more 
Holland Park; £19.5million guide price
A seven-bedroom and eight-bathroom Victorian villa complete with a swimming pool. Strutt & Parker less 
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Yahoo Finance UK
Fri, Jun 14, 2013 16:00 BST