Amazing / abysmal news this morning [delete according to taste and economic status]: the average London home looks set to be worth a cool half a million before the decade is out.
The average price of a home in the city already stands somewhere around the £383,000 mark. But the Centre for Economics and Business Research predicts this’ll rise around 31% over the next five years, breaching the £500,000 mark comfortably before 2020. That’s a faster rise than any other UK region: in the north east, by contrast, the CEBR reckons prices will climb barely 2.3% by 2018.
That house prices should continue to soar while we’re mired in triple dip is not as hard to explain as one might think. The 2011 census found around 8.2 million people were living in London, nearly a million more than just 10 years earlier. Add to that our status as playground-cum-tax-haven for the international rich, a (relatively) buoyant economy and the depressing shortage of new housing developments on the go, and a continuing price spike seems fairly likely.
If you’re sat there dividing half a million by your salary and sobbing like a child, though, Londonist can offer some comfort. For one thing, that half a mill figure is inherently speculative: economic forecasts are not known for their rapier-like accuracy.
For another, it’s an average, and five minutes playing with the Land Registry’s website reveals a much more complicated picture. On a whim, we decided to see how prices in different boroughs changed in the three years to December 2012, to see whether they’ve recovered since the rough bottom of the credit crunch. In that time, house prices have risen a terrifying 30% in Westminster, and 27% in Islington. In both cases, what’s more, they’ve climbed fairly steadily.
Out in Hillingdon, though, they’ve risen by a relatively titchy 7%; over in Barking they’ve moved just 4%. Suburban prices have also been much bumpier: in Barking, they seem to have fallen in just as many months as they’ve risen.
One lesson from all this is that the idea of an ‘average’ London house price is a nonsense, and obscures as much as it reveals: price changes will vary by borough, postcode, even by street. Another is that central London prices have risen a lot faster than those in the suburbs, and this, we suspect, will continue. You may never live in Soho, but Sutton or South Woodford may remain in reach.
A third lesson is that overseas oligarchs are relatively unlikely to be moving to the Becontree Estate any time soon. More fool them, really, as they might have picked up a bargain.