Property agents say London’s house price bubble risks will be under check by mortgage regulation constraints of market, stamp duty increase and future interest rate rise effects.
After UBS placed London ahead of Hong Kong and Sydney at the top of its 2015 “real estate bubble index”, fears were widespread about the city’s property price bubble. “London is by far the most overvalued market in Europe, at risk of a bubble as a result of explosive price behaviour since 2013,” UBS said.
According to UBS, “That imbalance between new instructions to sell and new buyer demand may also be putting upward pressure on prices: although average annual inflation in the Halifax and Nationwide house price indices has fallen slightly from its recent peak of around 10 per cent last summer, it remained robust at around 6 per cent in September”.
With academics from Lancaster University releasing research saying that London was on way for house price bubble by 2017, worries were compounded.
Although the UK Housing Market Observatory at the university set up for signs of pricing bubbles in the UK, did not have any such finding, it said the city would enter the bubble phase in two years and produce a ripple effect in outer London as well as whole of UK if real house prices in London continued to grow at current quarterly rate of 2.75 per cent, which will produce a ripple effect in outer London as well as across the UK.