London defies doomsters with house price surge

Should the latest astonishing property market figures from the Land Registry be a matter for celebration... or alarm?

It seem barely credible that prices rose at close to double-digit rates at a time when interest rates are rising at every meeting of the Monetary Policy Committee.

There are several reasons why this might be happening. First the “getting on with our lives” effect is far from played out. After six years of Brexit uncertainty and pandemic lockdowns there are plenty of Londoners who need or want to move for all the usual reasons of death, divorce, children and sheer aspiration.

Secondly the rise in interest rates may actually have brought forward many decisions to get on or move up the ladder while borrowers can still lock in at affordable rates.

Third, the huge fall in the value of the pound means the capital is still very attractive to foreign investors. Prices in the top addresses of prime central London are still around 15% below where they stood before the stamp duty changes of 2014.

It seems likely, if not inevitable that this latest spurt will run out of steam over the winter as borrowing rate go higher still. But the resilience of the property market — particularly in London — has defied the prognostications of doomsters for decades.

Across London as a whole there has not been a sustained deep fall in prices since the early Nineties. All the blips since have been relatively short-lived. Good news for owners but younger Londoners looking to put down roots through a property purchase will feel more locked out than ever.

@JonPrynn