Is The London Property Party About To End?

 

 

London Has Experienced One Hell Of A Property Ride Over The Last Few Years But Is The Party About To End?

 

London Property is going crazy; the neighbours have been kept awake, way too much alcohol has been drunk and we all did things that we might have regretted but is the party finally about to end

 

Some parts of London have seen a massive increase in prices since the lows of 2008, with Hackney experiencing a 939% increase since 2008 . The party has created millionaires as well as creating an entirely new generation rent  who are paying over the odds for their rental properties with absolutely no opportunity to get onto the ever elusive property ladder.

 

People Have Very Short Memories

 

We are currently in a unique situation; interest rates are at an all time low at 0.5%, there has been an under-supply problem in London for quite some time and the buy to let market has been boominmg.

 

However, there are a number of factors on the horizon that may soon change the picture completely

 

Interest Rates

 

Interest Rates will not and cannot stay at 0.5% forever. At some point, the years of printing money or quantative easing  will at some point come back and kick us in the backside. When this happens, the spectre of inflation will come back into the picture and when that happens the only only tool at the disposal of the Bank of England is interest rate rises.

 

With so many people so used to low interest rate rises, the interest rate shock that would be caused by even a relatively mild rise in interest rates will have a huge effect on property prices

The Buy to let market

 

The UK government has recently finished releasing some of the most draconian rules against buy to let as an investment that we have probably ever seen. The effect of punitive stamp duty charges for new buy to let investment, together with increased taxation on the rental income received

 

The effect of this – a flood of properties coming back on the market and a resulting reduction in prices

 

What Next?

 

Well, there are certainly a number of London property home owners and indeed Mortgage Advisers hoping I am wrong but generation rent may soon have a much lower housing market to choose from