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London house prices are set to rise 8%
this year as the capital’s residential property market continues
to recover, according to property consultant King Sturge.
House prices in the prime central
London area rose 4.8% in 2005, but King Sturge believes growth
will be almost double that this year as house sales pick up again
following the recent slowdown.
Overall, King Sturge predicts
prices will expand on average 3% in the UK in 2006, with London
and the South East tipped to outperform the national market. In
2005, the average house price also rose 3%.
Guy Weston, a residential
researcher for King Sturge, said the market’s resilience in 2005
would support buyer confidence in the year ahead. He added that
foreign investment in the UK market remained strong.
‘Structural under-supply of
housing will continue to underpin the market as medium-term
household growth projections exceed net new housing supply by
29%,’ Weston said.
‘Employment is high with both
debt costs and inflation historically low. The economy is showing
signs of increased stability and less volatility than in previous
downturns. This is good news for the housing market where one of
the key factors underpinning pricing is a sound employment
market.’
Meanwhile, Weston said Chancellor
Gordon Brown’s U turn on Sipps last month would have little
impact on the residential property prices, including the city
centre apartments market.
‘We estimate that no more than 5%
of second half 2005 sales were Sipp related,’ Weston said.
Looking at the commercial property market in the UK, King Sturge
believes total returns are most likely to average 9% this year.
However, it also said there was a
reasonable chance returns would match those of recent years and
reach 15.5% in 2006.
Article
by Victoria Kelly
News
correspondent
City
wire
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