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Economists at PwC and Cebr predict ongoing rapid growth for London and the South East
June 5, 2014Article by Ray Withers
Economists predict ongoing significant growth in nationwide property prices – with the highest scope being in London. PricewaterhouseCoopers (PwC), one of the global Big Four auditors, has now predicted sharp price hikes over the next 18 months in the capital. This further dismisses fears of a potential bubble, as London leads the UK market recovery in both values and speed.
Over half a million “average” for London property by end of 2015
Senior PwC economist, William Zimmern, explains: “We estimate average house prices in London could grow by 13 per cent this year and nearly 10 per cent in 2015. So the average property in London could be worth almost £560,000 at the end of 2015 – around double the UK average – and up from £450,000 at the end of 2013.”
This growth will not be restricted to London either, as the rest of the UK looks set to follow at a slower pace. According to Zimmern, UK house prices are predicted to grow by 8 per cent in 2014 and 6 per cent in 2015. The PwC analysis suggests the average UK property could be worth around £285,000 by the end of 2015, up from £250,000 at the end of 2013.
However the imbalance in supply and demand, which is leading this growth, must be addressed. Business Secretary Vince Cable recently told ITV news: “There is an enormous gap between what’s needed, which is probably 300,000 houses a year and what we’re currently getting, which is 125,000 to 130,000. We are way short on the housing supply which is needed.”
London economy will account for a third of all UK GDP growth over next five years
Further new forecasts from the Centre for Economics and Business Research (Cebr) also show sharp accelerations in the London economy. The capital’s economy is expected to account for almost a third of all UK growth in the next five years at 15.4 per cent. This is 3.5 percentage points of the total 10.7 per cent UK GDP growth predicted. This growth, expected to expand by 4.2 per cent over 2014 and 3.4 per cent in 2015, means London is set to restore its status as the fastest growing UK region after the South East held the title in 2012 and 2013. The South East follows as the second fastest growing region in 2014.
The economic growth in London is expected to boom around the business services, technology and construction sectors, with employment also being boosted. London employment is projected to rise by 2.8 per cent over 2014 as a whole and by 1.5 per cent in 2015. Five year employment growth is 6.1 per cent is predicted, with strongest growth in construction (7.3 per cent in 2014 alone), followed by finance and business (11 per cent over the next 5 years, equivalent to circa 100,000 jobs).
Cebr Economist Christopher Evans comments: “Our latest forecasts show robust growth across the UK – especially in London. Growth has returned to the financial services sector faster than expected in the capital and the strong bout of constriction in the region will help fuel London’s economy in 2014.”
Greater London areas of regeneration outpacing the centre
The supply-demand property imbalance and speed of growth are now starting to show more significantly in Greater London than in the capital. Over the past 12 months Waltham Forest has topped the chart with a rise of 23.5 per cent, followed by Lambeth (21.9 per cent), Southwark (21.1 per cent), Islington (20.6 per cent) and Hackney (19 per cent). These boroughs are now outperforming the central London average of 12.4 per cent and previously-desirable postcodes such as Kensington and Chelsea (12.8 per cent).
In particular, SE postcodes are now becoming the ‘must-haves’ for investors, homebuyers and tenants alike. Investors are seeing higher yields in these areas, with homebuyers and tenants drawn to billion pound neighbourhood regeneration projects.
SE8 – the new ‘must have’ postcode
Ray Withers, Property Frontiers CEO, says: “Deptford, SE8, is the one to watch right now. Tipped as a major London “area of opportunity”, the “new Shoreditch” and attracting billions of investment, Deptford is outpacing its neighbouring Greenwich, SE10 as the must-have postcode. You can have an SE8 postcode too, as we can now offer a selection of apartments in the RISE development in Deptford, which is a superb example of a sustainable investment which will deliver now and in the future.”
Get in touch on +44 1865 202 700 to find out more about how you can invest in the RISE development in Deptford.