Is London becoming Manhattan-on-Thames?

By January 9, 2012House Repossession

Property PricesIs London becoming Manhattan-on-Thames?  That’s the question posed by Ian Cowie in today’s Daily Telegraph.

Now in their thirty-fifth year of issuing reports on the housing market, London estate agent, Knight Frank, claim the capital is bucking the national downward trend in house prices, hitting new heights in December 2011 when London property prices were up 7% on their pre-credit crisis levels.

As far back as October 2010, Cowie explained the contradictory London market like this:

“… the international popularity ofBritain’s capital city, not just as a pleasant place to live but also as a relatively secure location to park large amounts of wealth. Russian oligarchs investing millions of pounds in Highgate mansions and American film stars in Hampstead need not fear that their property will be seized by local or central government, as can happen in other countries.”

Foreign buyers continue to inflate the London market – despite the current uncertainty triggered by the problems with the Euro and total London property market growth in 2011 was 12.1%.

The rest of the country is not faring quite so well: mortgage approvals continue to run at just 50% of the usual level and those ‘in the know,’ Halifax and Nationwide, for example, continue to predict falling prices. Halifax reported an annual fall-off of 1.3% in house prices over 2011.

While the London trend is fortunate for those who already own property, ordinary Londoners won’t stand a chance of buying in such a market – they will be forced to rent, which will, of course, push rents higher, or commute from the suburbs – and travel doesn’t come cheap nowadays, even if you can afford the expense of a season ticket. A twelve-month season ticket from Luton to London St Pancras comes in at £3,604…

So, while London property owners sit pretty and house owners in the rest of the country pray for an upturn in the market, one suspects the younger generation, desperate to gain a foothold on the property ladder, are praying for the UK property market to crash.