London house prices: are they as expensive as we think?

The average house price in London has now reached more than £600,000 and is continuing to rise. LSL Property Services, which released the figures, says this means prices in the capital have almost doubled since 2009.

The new average—£600,625—marks an 11 per cent year-on-year jump.

It is clear, therefore, that London property is continuing to climb in value and far outstrips the rest of country, where prices are about half of that figure on average.

Yet is it really helpful to compare the capital to the rest of the country? Given that it is a global city, is London property expensive when compared to other places on a similar scale?

Property price growth league table

A separate study by Knight Frank recently put London at 23rd in a league table measuring ‘prime’ house prices in cities across the globe. This study said that property at this end of the market actually fell in price by 0.6 per cent for the six months to March.

By contrast, properties in Vancouver rose by 26 per cent. The Canadian city, which suffers from a lack of supply, topped the league table, ahead of Shanghai and the Australian cities of Sydney and Melbourne.

Favourable conditions in Auckland, New Zealand, have seen the city highlighted in a report by Christie’s as enjoying strong growth too. It says that there has been a 63 per cent increase in the sale of homes worth more than £690,000 ($1 million) thanks to the strong economy, favourable tax conditions and lack of visa requirements.

In terms of price growth, London’s market actually lags behind other large cities. It’s clearly far from the only city enjoying consistent and persistent property price growth. But growth doesn’t necessarily relate to expense. For this we need to explore the comparative cost.


Property price per square metre

The website Global Property Guide offers such a comparison. Providing figures in Euros, it puts the average price per square metre at 25,575€. These figures are given for the UK but are taken for the ‘most important city’ for the country. That figure is the second highest in Europe, behind Monaco (44,522€) but ahead of France (13,639€), Russia (11,866€) and Austria (10,807€).

For the US, the figure stands below that of London house prices—at about 16,300€ when converted from dollars—yet Hong Kong’s figure is not far off London, at about 20,100€.

Expensive but stable

On the basis of this analysis, it’s probably fair to say that London’s prices are as expensive as we think, with prices per square metre easily among the highest in the world. Growth is higher elsewhere in the world, but London’s property market continues to prove attractive, with prices maintaining and—as a whole—growing.

This comes from the fact that London continues to be a global leader in the finance sector, as well as being an attractive destination for tourists, given its iconic array of landmarks and attractions. Don’t lose sight of the quality of the housing stock either. When side by side with others on, London’s properties easily hold their own and this contributes to its value.

With the quality and attraction of London unlikely to slide, only an impact on its financial status is likely to make properties any less expensive.

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