London will escape house price crash in 2008

Thursday, 6 December 2007 12:00 AM

The prime central London property market will escape the house price falls which are expected across much of the country in 2008.

Predictions from Nationwide, Experian, and the
Intermediary Mortgage Lenders Association (IMLA) have all suggested house price inflation will be flat or in decline next year, but robust growth in the capital is expected from property specialists Savills.

"We're predicting growth in the prime central London market of about five per cent next year," said Lucian Cook, director of research at Savills.

"To date, you haven't seen the reduction in prices or indeed the slowing in growth rates in London to anything like the same degree as some of the other areas in the country," he added.

London has been by far the strongest region in the UK, according to Savills, with even a fall in City bonuses unlikely to be detrimental to house prices.

"We anticipate that the prime central London markets are going to be impacted by reduced bonus expectations in the short term, but that they will return to growth certainly by the back end of next year," continued Mr Cook.

Commuter towns, however, are unlikely to witness uniform growth.

While some will see prices buoyed by money from the capital, they are also reliant on local demand, and as such prices are likely to fall in line with regional variations, according to Savills.

As a result the capital could become further detached from the UK's housing market.

"I'm sure you will find there will be some real segregation in the market, between the prime markets - which still have the benefit of both local demand and city money demand, albeit relatively lower than it has been in previous years - and those markets which are purely constrained by affordability issues," concluded Mr Cook.

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