Duncan Lewis

Residential Property

Commercial Property

London housing market set to remain buoyant despite the eurozone turmoil with more and more Europeans shopping for homes in London

Date: (5 June 2012)    |    

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The Centre for Economics and Business Research (CEBR), has said that in the days to come house prices in the capital would see a rise of 2.4% this year while the prices in the North East is set to drop by 2.7% this development is to continue into the next year with prices in London rising and that in the North- East falling.
Chief executive, Douglas McWilliams, of CEBR, said that the demand in London property market would remain flexible, with the ongoing eurozone turmoil grabbing international attention in the capital. Additionally, there would be many French citizens who would be buying properties in London once President Hollande announces the hike in rate of income tax to 75%.
He added that the south-east, the east, as well as the east and west Midlands would all enjoy gains of at least 1% this year, with every other region suffering falls. Scotland and the north-east will be the only two regions hit by house price declines of more than 2%, McWilliams said.
London property market keeps the optimism alive despite the desperate situation in the eurozone which was being cited by some experts of triggering a potential slump in London market. Previous week a report by the City consultancy Fathom said that it was due to the Europeans, searching for safe investments that led to the rise in the prime London property price since the mid 1990’s, initially the skeptism of Euros’ success and then since 2010, sovereign debt crisis of Euro.
However, Fathom added that house prices in London's most exclusive districts would crash by up to 50% over the next five years in the event of the eurozone collapse.
But CEBR said it had not taken into account the sudden collapse of the eurozone because there were so many unknown factors though it itself has been a vocal skeptic on the future of the single-currency zone and its own data showing a recent slump in City jobs, which are directly related to London house prices.
Shehan Mohamed, CEBR's housing economist, admitted that even London market would not survive if the eurozone collapsed but he also predicted that rising rents would keep house buyers interested as higher rents were going to act as a motivation for people who have to pay higher rents and also the buy-to-let market would find the high rental yields stimulating.