More Properties for sale in North West London Needed

Theon-going shortage of residential properties in prime central London in relation to record high demand, fuelled by a flurry of international buyers, is continuing to push property prices higher. The latest Knight Frank Market Update shows that the  average price of a home in the heart of the capital increased by 0.9 per cent in January, compared to just 0.2 per cent across the UK as a whole, taking the annual rise in prime central London to 8.4 per cent.

Demand for residential properties in central London has been boosted in recent months by the draft Finance Bill which gave some clarification on the ARPT, which helped offset the downturn in sales witnessed for much of last year.

The weak pound, solid rental returns and good prospect for capital growth have also helped to boost demand, particularly among foreign buyers.

Peter Rollings, CEOMarsh & Parsons, commented: "The relative shortage of stock sees house prices in the capital setting new records according to Nationwide. Demand is coming from both home and abroad and is set to continue with the much anticipated return to more seasonable Spring-like weather."

This strong demand in central London is expected to ripple out to other parts of London, especially in North West London, where some of the most desirable districts in the capital are situated. The concern is that there are simply not enough properties for sale in North West London, due to a general housing shortage. 

Andrew Ellinas, Director of Sandfords, said: "The success of the prime central London property market over the last five years is creating a wave of price rises in nearby areas as people move further afield in search of value." 

Ellinas reports that there is a particular shortage of properties for sale in St. John's wood, Primrose Hill and Maida Vale, traditionally regarded as outside the prime central London zone.

"These areas are now developing into an 'outer prime London' market," he added.

Strong prospects for capital growth is an attractive proposition for property investors, but it is the lure of solid rental returns that far outstrip low saving interest rates, which ultimately appeals to investors, thanks to strong demand for properties to rent in North West London. 

David Whittaker, managing director at Mortgages for Business, said: "Tenant demand for residential property is ballooning thanks to the lack of mortgages available to first-time buyers. Every month more and more would-be buyers are being forced to rent, and this is pushing up demand to astronomical levels, producing very attractive gross yields for landlords as a result."

In fact, 61 per cent of private and social housing tenants in England do not believe that they will ever be able to purchase a home, mainly due to affordability constraints, according to Castle Trust.

Sean Oldfield, chief executive officer, Castle Trust, said: "Many people are either unable to get on the property ladder or stuck in their current home despite interest rates still being at an all-time low. Schemes like the Government's Funding for Lending are helping to boost borrowing options but the market still needs innovative lending products."

Castle Trust's analysis shows that owner occupation in England has fallen by 200,000 from 14.6 m in 2008 to 14.4m in 2012. Its data also indicates that there has been an increase of 23 per cent in the number of people who are choosing to rent in the private sector, with 3.1 million renters in 2008 rising to 3.8m renters in 2012; the rise in rental demand is a highly attractive proposition to buy-to-let investors.