A lack of property for sale in London has caused a significant upturn in asking prices across most parts of the city, according to various property price indices. UK property price inflation looks set to reach double-figures in February, after statistics released by Nationwide's figures showed that the average price of a residential property appreciated by 1.2 per cent in January and 8.6%, or 13,000, since January 2009. The data compiled by Nationwide reveals that the property market started 2010 strongly, with the average cost of a residential property in the UK appreciating by in excess of 1,300 in January to 163,481. It was the ninth consecutive month that Nationwide reported a property price rise, and the rate of increase was the fastest since October 2007. Martin Gahbauer, Nationwide's chief economist, said: "Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007." The greatest property price rises in the UK have undoubtedly occurred in London in the past year, owed largely to a stringent supply of London property for sale. Peter Rollings, the managing director of Marsh and Parsons, a leading London estate agents, said: "Property prices in my view increased substantially in Central and West London last year, with values having risen by up to 15% [year-on-year]." Although the strongest property price rises in London appear to have occurred in South West London and North West London, which is where demand for property for sale has typically been greatest, asking prices across the city have generally improved. This is largely due to the shortage of property for sale in London. While there is no absolute correlation between London property price trends and the volume of residential properties up for sale, there is little doubt that the recent improvement in the London property market is closely related to the lack of available homes for sale. This is particularly the case as far as London property sale is concerned, according to Andrew Smith, Primelocation’s head of research. Rollings added: "The year 2010 has started as 2009 finished, which was busy. The last quarter was really exceptional for the London property market. There is currently immense competition for existing properties for sale in London." "The first 10 days of 2010 alone bought on around 500 new property buyers to the market, but stock [lack of supply of property for sale in London] remains an issue." Record low interest rates, government intervention and greater consumer confidence has also helped boost the London property sale market. Liam Bailey, head of residential research, Knight Frank, commented: "In the space of little more than 12 months we have seen a shift from a near market meltdown to boom rates of price growth. "Since last April the combined impact of ultra-low interest rates, government stimulus, and rising confidence from buyers - about their own and the economy's prospects - have served to push prices higher, with 15% growth in the ten months to January this year. Overseas nationals have played a big part in the recovery of the London property sale market, many of who exploited the weakness of sterling to buy property in London. A large proportion of all London property sale transactions recorded in 2009 were to foreign buyers, due to the fact that the UK pound has been trading at historic lows against most major foreign currencies. Foreigners continue to eye up property for sale in London, especially as the recent London property price correction now appears to be well and truly over. The global economic downturn may have previously hit the UK hard, but with the country now out of recession, the dramatic turnaround and consequent improvement in the London property market shows little sign of abating. Surging demand for residential property in London should result in even higher residential prices, with Rollings projecting an annual London property price increase of between 5 per cent and 7 per cent in 2010. Until more properties in London are made available for sale, prices are likely to continue heading North.
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