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

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The house prices in London have been increasing at an astonishing rate over the past months, thus posing the threat of a house price bubble in London. Some pundits argue that the massive an influx of house prices is part of the recovery from the previous crash but the extent of…
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There is a real danger of a house price bubble in London. Discuss
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Download file to see previous pages Such a scenario envisions that indeed the house price bubble in London which is about to burst. Ideally, just like any other cosmopolitan city in the world London’s property market has been on an upward trajectory for a considerable period given the fact the position of the town on the global map is favourable for both business and luxury living thus attracting the world’s rich to purchase the properties (Nationwide Building Society, n.d.).
The influx of foreign capital into the London house market led to the steady increase of the house prices to cater for the growing demand by outsiders thus making the process unaffordable for the local Londoners. According to the available statistics, Middle Easterners account for about forty percent of London’s luxury property buyers followed by Americans and Russians. The fact the foreigners are increasingly becoming attracted to investing in London’s property market has been the primary reason for the massive surge of house prices in London. Developers are coming up with luxury and new concept homes to cater for these clients who are ready to part with premium prices as opposed to the locals who cannot afford the house prices. Literally, a significant number of Londoners have been shelved off the price ladder since the prices is technically unsustainable for them since they do not match their earnings thus making the homes unaffordable to a majority of London natives (Fry, 2013).
On that light, the buyer demand for London properties has fallen drastically since the target market are essentially the wealthy foreigners who are willing to spend extra capital to acquire the premium homes in London thus scaring away the conventional buyers from making offers for the houses. However, the situation is not exclusive in London alone. Conventionally, it was deemed that the price surge was only limited to the prime areas of London such as Westminster. The ...Download file to see next pagesRead More
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