Report urges cooling for London property market

An 18-page report published this week by economic forecaster the EY Item Club claimed the market in London was showing signs of a bubble. It stated that a limited housing supply and strong demand had driven up prices by more than 11 per cent last year, significantly higher than the national average of 6.5 per cent.

Mark Carney, the governor of the Bank, said last month that the rising market was not currently a threat as mortgage approvals and sales were rising from a “low level”, but Dean Hodcroft, head of real estate and construction at EY, was more concerned.

He said: “It may make sense to take targeted London-only cooling measures, such as capping income multipliers on mortgages.”

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Mr Hodcroft added that any cooling measures could also create “complex new distortions” such as tilting the market in favour of cash buyers from overseas. Reports emerged last week of empty properties in some of London’s most luxurious neighbourhoods being bought by foreign investors.

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Andy Wilson, director of Lincolnshire-based Andy Wilson Financial Services, said: “It’s a free market so I’m not sure what can be done to cool it down. However prices are at a fantastical level in London. I would imagine that supply and demand will ensure a level is found eventually.”