While house prices around the UK have been through a turbulent period over recent years, central London property has been relatively sheltered.
Indeed, figures released by the Office for National Statistics (ONS) have highlighted this phenomenon. The organisation noted that house prices continued to rise in 2012, driven largely by demand for property in London and the south-east of England, the Daily Telegraph reports.
The ONS revealed that while UK house prices rose by 2.1 per cent to £232,000 in the year to November, prices in the capital increased by five per cent to reach £393,000.
One of the reasons why central London apartments and flats are rising in value so much compared with many other parts of the UK concerns the interest in such property among foreign buyers. According to the Daily Telegraph, this was initially due to the “global super-rich” seeking protection from worldwide financial uncertainty and tax rises.
However, it added that more recently, agents have been suggesting that middle-class Chinese buyers with children coming to study in London have been buying property.
The publication went on to point out that investors have already reserved luxury homes planned for the revamped Battersea Power Station in south-west London, with 600 of the development’s 800 properties already claimed after less than a week on the market.
Meanwhile, economists have suggested that the prospects for the property market as a whole remain tough for this year, with high unemployment and limited wages in growth expected.
However, attempts by the central bank to cut mortgage rates could help prop up demand. Commenting on this, economist at IHS Global Insight Howard Archer said: “Some support for house prices should come from recent decent employment growth and likely extended low interest rates, while mortgages appear to be becoming increasingly available helped by the Funding for Lending scheme launched at the start of August by the Bank of England.”