There is a real danger of a house price bubble in London. Discuss - Essay Example

Currently, effects of the bubble cause disruption in housing and economic system in London. The danger in housing bubble is becoming more eminent due to factors surrounding the London economy. UK housing bubble is demand related with prices falling slightly in 2008 due to low demands (Economic Outlook, 2013, p.6). Identification of economy bubble is easy contrary to beliefs of many economists. Signs of housing bubble were evident in London over two years ago. Over a year since then, the prices have continued to rise making the more unaffordable to people.

This poses many dangers to those living or willing to live in London city, as the cost of living will also is unbearable. The house price bubble probably affects all the sectors in London’s economy. Localization of the effect of house price bubble has base in London alone now and other areas may experience their own bubbles. Rise in houses prices does not currently discriminate location of the area. It takes place all over the city. At first, one may think investors have taken even the poor regions of the city due to high prices.

Percentage house prices increases in Brent and Lambeth were almost similar to those in Hammersmith & Fulham and Westminster. The rate of price rice in London is above that in any place in Britain and the rise is consistent since 2003 while all other factors changed slightly. House price rise estimation is at 18 percent. Although the rate of increase has not reached tat of 2007, its overall prices remain high than those in 2007. Building society has confirmed that t this percentages are greater than they had been before.

The impact of high house prices affects the economy, which in turn cause low living standards. High debts numbers has macroeconomic impact that may cause recession, which has great effects. The house prices in comparison to employees’ wages bring out the effect clear. In the past decade, salaries payable to any