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News Release

Shanghai

The London housing market continues to flourish

With unprecedented price growth recorded in all markets


​Latest research by leading real estate adviser JLL unveils the unprecedented growth and activity taking place in the London residential property market over the past 12 months, analysing the contributing factors that are supporting this demand.

“London is currently experiencing a huge upsurge in price growth across all Central London markets, both in prime central London and the outer core. Most notable is the increase in values in the City and East London markets where prices have accelerated by 16.5%, ahead of the 12.2% average seen across the whole of Central London.” said Zhang Hong, Head of International Residential, Beijing.

Adam Challis, Head of Residential Research, UK comments: “JLL’s research also unveils the level of activity in the Riverside submarket as many investing in London real estate rediscover the virtues of waterside living. As a reflection of this, JLL for the first time identifies the creation of the Central South sub-market as the first ever Prime sub-market located on the South side of the River Thames. Challis comments: “Inclusion of Vauxhall, Nine Elms and Battersea within our Prime definition is more than just a reflection of much stronger residential pricing. This decision is based on the changes to the fundamental characteristics that underpin this sub-market, including new high-value employment and retail offerings that signal a step-change improvement in what it means to live in Central South.”

When analysing the nationality of Central London purchasers of new build property in 2013, JLL’s in-house data shows that mainland Chinese buyers represented 6% of the total transacted*, 17% were from Hong Kong, 11% were from Malaysia and 15% came from the Middle East. British purchasers accounted for 19% of the total, supporting the shift in demand that we are seeing as domestic buyer confidence increases. “The 10%-30% down payment and the low interest rates for individual investors (currently at 3.88% only) for up to 70% mortgage applicable for Chinese have attracted more and more mainland China investors and it’s expected that the number of Chinese buyers will continue to grow in the next 5 years. The vibrant leasing market and the surging demand have added extra confidence for investors. There is also a current trend from Chinese buyers for higher-value properties, with averages now exceeding £1 million, nearly twice the average compared with 2010." said Michelle Liu, Head of International Residential, Shanghai.

As one of the most popular offshore residential property investment destinations, London is not only the preference for Chinese high net worth individuals, but also for Chinese institutional investors. London is always regarded as the world's leading investment locations and retains a ‘safe haven’ status in times of political or economic uncertainty. We have the vision that Chinese investors and developers such as Greenland and Wanda will become major players in London residential development market.

Responding to the recent concerns about the current rate of house price growth in the UK, and particularly London, Challis believes these concerns are unfounded: “Much of this accelerated growth is only taking place in London and this rise in demand is caused by very unique factors that only apply to London. We simply cannot compare the rest of UK to this market. London benefits from being one of the most influential international cities on the globe, being at the centre of global commerce, political and economic stability and culture.”

Further to this, JLL’s latest Global Cities research report released in March – the Cities Momentum Index - places London alongside San Francisco as the best cities in the world to leverage three global drivers; globalisation, urbanisation and the growth of the digital economy. London’s performance on the Index demonstrates that the city is dynamic and moving forward, regardless of its existing strength.

Our price growth forecasts for London and the UK over the next five years reflect a more optimistic picture for the national market than any other point in the last six years. Mid-single digit price growth is expected across this period, with a small retrenchment in 2017 as a higher Bank of England base rate begins to increase the cost of mortgages. London will continue to lead all regions in terms of price improvements over the period.

Looking at the London residential property market, Michelle Liu concludes: “The role of international buyers in London remains hotly debated, but it is clear that this flow of capital has been vital to enable new housing supply. London offers solid long-term residential investment prospects and increasingly the development industry is also becoming international as new entrants drive a step-change in choice for prospective purchasers.”

Notes to Editors:
* Please note this refers to only JLL transacted data only, not the market as a whole