(1888PressRelease)
July 25, 2007 - This month's Halifax House Price Index confirmed what everybody already knows about the property market in London - it carries on booming even while the rest of the country slows down. No less than three UK regions - Wales, the West Midlands and the south-west - saw prices fall in the three months between April and June 2007, while the same period saw London up 4.9 per cent. The last year saw prices in the capital increase by 18.4 per cent. The average London home now costs over £313,000.
Inevitably, some believe the buy-to-let boom has had a role to play in the house price crisis. The argument goes that as more investors buy up available properties, less are available to be bought up by Britain's growing army of frustrated and overstretched first-time buyers.
Not so, insist the experts. The National Landlords Association's (NLA's) spokesman Simon Gordon pointed out that many of the properties the buy-to-let market specialise in are different from the kind of dwelling a first-time buyer would look for.
He said: "There is no automatic link between being a property that a first-time buyer will be able to afford and a buy-to-let property. Particularly if it's in central London it's going to be an expensive flat, which is not necessarily the type of property a first-time buyer will be purchasing."
This view is shared by property consultancy Hometrack. Its director of research, Richard Donnell, told the Times the argument about homebuyers being frozen out is a red herring as it is not just buyers who are at risk of being frozen out. Telling the paper it is important that "concerns over the activities of private investors do not distract attention from the bigger picture", Mr Donnell noted that there is also a need for more rented property as well as more affordable homes to buy. Hometrack's data puts this figure at 600,000 new properties to rent by 2021.
London is experiencing varying fortunes in its buy-to-let market due to different factors. While rising demand may be offering strong prospects across the city as a whole, the forthcoming Olympic Games has had an unexpectedly negative effect on east London. As Shane Jackson, sales director for estate agent Atkinson MacLeod told the Times, the "real buzz" about the area becoming a hotspot has dissipated because of the transition the area around Stratford faces. He said: "In people's minds, east London is going to be one gigantic building site for the next five years."
Nonetheless, demand for buy-to-let is booming in London in parallel with the residential market in the same way as it is not booming elsewhere, the NLA's Simon Gordon points out. He stated that the north (north-east and Cumbria) where house price growth in the last year was little over half London's annual rate at 9.4 per cent, the rental market is also much weaker. "In cities and towns in the north-east some landlords have trouble renting out their properties," he said.
There seems little prospect of that situation in the foreseeable future in London.
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