25th September 2015
Would-be homebuyers in London are reaching tipping point and could be forced out of the city en masse by unaffordable property.
A report by property analysts Hometrack said buyers are considering leaving London and moving to more affordable cities. The average house price in the capital is now £437,000 – a record 12 times the average salary – and prices have increased 10% over the past year. The sharp increases in London prices also means the gap between prices in the capital and other major cities is now at a 20 year high.
A buyer could purchase four homes in Glasgow, three in Manchester, or two in Bristol for the cost of one London home.
However, a London exodus may not be all bad news as other cities could attract new investors and developers looking to expand into more affordable markets.
Richard Donnell, director of research at Hometrack, said: ‘London’s price to earnings ratio is at an all-time high, while there remains value in most other regional cities.
‘The pricing differential to London could well assist city regions in attracting new investment as the cost of housing starts to influence decision making for both households and businesses.’
The National Association of Estate Agents has reported that the supply of homes for sales across the UK is fell to an 11-year low in August.
Mark Hayward, managing director of the organisation, said demand was outstripping supply and that the country was ‘reaching crisis point’.