Prospective buyers who are priced out of the UK capital are looking farther afield posing possible stagnate home prices in central London in the coming year, predicts Righmove Plc, as reported by Business Times.
The report, which was published by the property-website on Monday, revealed a 6% rise in London asking prices which in turn caused a 3% climb for the capital. London experienced 0.5% drop in prices this month, compared to the 1.1% drop on a nationwide scale.
Just over the past year, house prices in London have already seen an increase of 10% which brought it at the average mark of £616,548 (S$1.3 million), which is 20 times over the average salary of £30,821.
"2016 may be the year when many young urban professionals finally give up on the London market" and instead look at cities such as Manchester in northwest England and Edinburgh in Scotland, said Alasdair Rae, a University of Sheffield professor who analyzed the data for Rightmove.
"They are already very popular and pricey because of what they offer, but may seem cheap to London émigrés priced out of the capital."
The fewer number of homes on the market has also led to the 7.4% annual rise in UK asking prices in December, says Rightmove. In a year, there was a 37% increase during the fourth quarter in the number of prospective buyers that have made real estate inquiries, while there was a 5% drop in the number of properties available in the market.
'British Challenge'
While it's normally during December that asking prices fall, but this was smallest drop across the country for the month since 2006. Rightmove tracked 10 regions and each one posted declines, with Wales topping the list at 3.6%.
Camden in London was the best performer at 15.3% rise in November, while City of Westminster dropped 8.5%, and is considered the biggest fall.
Chancellor of the Exchequer George Osborne recognizes the issue and coins it as "a perennial British challenge," and pledged to provide financial incentives for homebuilding. He also plans to tax rates on purchasing properties for rental and second homes in order to decongest the competition for first-time buyers.
Although there have been wage increases, the improvement may only be up to helping affordability measures. In Monday, Bank of England Deputy Governor Minouche Shafik expressed that gains may have leveled off, while basic pay growth may have cooled to 2.3% in the three months to October, as to be seen in data set to be released on Wednesday.
"Whilst initiatives are in place to encourage developers to build more new homes to supplement the supply of existing ones coming to market, the lead times are long and developers face capacity constraints," said Miles Shipside, commercial director of Rightmove.
