London is a decidedly quirky property market, and the conditions in the capital are possibly the most unique in the world. The huge city has always drawn people from across the globe, putting pressure on housing stocks as the population grows. Letting agents have never been short of tenants, and house sellers rarely wait long for buyers. But there are other forces besides population expansion at work. In recent years the trend towards a high rate of savings in Asia and a shortage of high interest investment vehicles has meant London's property market, which is usually on an upwards trend, has been seen as an attractive investment for people and wealth funds around the world.
Part of the effect of this trend is that money coming in from the top ultimately drives up the price of property at the lower value end of the ladder. It works like this: wealthy overseas investors looking to park up to £10 million in a safe property purchase will comfortably be able to pay £8 million for a property. This means that wealthy investors with a budget of up to £8 million are then priced out of such properties but they can then make higher offers on properties offered in the region of £7m. This effect continues down the ladder of value, affecting all properties in the market as a combination of housing shortfalls and wealthy buyers drive up prices at all levels. However, this effect could be slowing down: the strengthened pound means that property here is more expensive for investors from countries such as Malaysia and India, reducing the pool of overseas investors to some extent.
The lack of available space in an already crowded city means that there are very few options for building new developments. And because the south-east area is highly developed, it's difficult to add new infrastructure such as new railway lines and roads that might open up new areas of land outside the capital for development.
There are other major cities around the world that have experienced similar conditions, but there are some elements of the London property market that are unique. Estate agents such as Savills report that there is a phenomenon for international buyers to snap up the majority of new build properties, often before they are even built. Political turmoil overseas often has a surprising effect on the capital's housing market. Uncertainty in Pakistan is thought to have led to a boom in property purchases in west London, as the Pakistani community invest in the area of Southall. Photo by Murad Hassan