Home prices in London, U.K. went up to reach a record high in the month of June as more number of foreign investors poured in money into the real estate market of the city.
According to a report compiled by Academetrics Ltd, a real estate intelligence firm and LSL Property Services Ltd, it was revealed that home prices went up 0.2 percent on an average throughout London. On a year on year basis prices rose 2.5 percent, which is considered a huge jump. Other reports by Hometrack and Nationwide also showed similar results claiming home prices spiked 0.4 and 0.3 percent, respectively, reports Bloomberg.
The steady growth has been attributed to the growing number of foreign investors in the country, especially from Asian investors.
"This increase in residential values reflects the ever-growing interest from Asian purchasers in London investment property, having been driven out of their domestic markets due to inflated values," Hannah Lewin, marketing manager at Regal Homes said to The Standard.
Apparently, central London has been benefiting from foreign investments as the businessmen think of the city as a "safe haven". London has always managed to stay away from the economic and political chaos of continental Europe, which has made it a lucrative investment option.
Experts believe that home prices will continue to rise in the region for the later part of the year. The U.K.'s economy will get a boost from London's buoyant real estate market. About $236 billion was added to the value of homes in Britain between April and July 2013. The total value of Britain's residential stock went up to reach $9.41 trillion, according to the Independent.
While on one hand, the property market is all rosy and attractive on the surface, some reports suggest that the city might just find itself tumbling downhill soon. According to a feature in LondonlovesBusiness.com many crucial factors could burst London's emerging property bubble. Factors like government controls on visas, taxes, a political fallout and the unreliability on government lending and low mortgage rates could put the city in a gloomy state sooner than one expects.
The feature starts with some clever modernist-with-a-twist-of-pop poetry that reads:
Double, double, toil and trouble;
Fire burn and London property bubble.
Prices are rising, demand is growing
There seems no chance this jovial mood will soon be slowing.
Asking prices are back to an all-time high,
With no one thinking that their time might be nigh.
But be wary fellow Londoner,
For we may all soon find ourselves regretting our housing blunder.
