The London property market could be about to crash after an extended period of price inflation.
-London property prices rose by 23% between 2013 and 2016
-Leading economists now predict the London property market is heading for a crash after a period of unsustainable house price growth
-Experts expect investors to gravitate towards properties in prime regional cities, including Manchester and Birmingham
After a 23% rise in London property prices between 2013 and 2016, leading economists are now predicting that 2017 will be the year the London property bubble finally bursts, with historical evidence suggesting phases of exuberant house prices are often followed by a sudden crash.
Online agent eMoov.co.uk has calculated the potential impact to London property values, should the UK experience a market collapse similar to the global financial crash 2007. Their calculations reveal the average property could see a reduction in value of up to £858 per week, while Overseas Property Professional (OPPToday) suggests total property values could fall by as much as £78,267.
Russell Quirk, Founder and Chief Executive Officer of eMoov.co.uk, said: “Although the UK property market as a whole is faring very well, there are signs that the London market, particularly the prime central end, is running out of steam heading into 2017. It is unlikely that we will witness a market crash as monumental as the one we experienced a decade ago, this research acts as a warning of what the worst-case scenario might look like with London homeowners.”
Experts believe that investors will now naturally gravitate northward from London, towards prime regional cites such as Birmingham and Manchester, which are predicted to see above average price inflation during 2017.
Manchester in particular experienced rapid growth of 8.9% in 2016 and is expected to overtake Bristol this year to become the number one city for highest price growth in the UK and a hotspot for investor activity.