Situation could soon improve for London first time buyers

13-Jul-2007

The problem facing first time buyers in London has been starkly illustrated by new house price data showing annualised price growth of 34.5 per cent, but a further investigation reveals fresh hope for potential home buyers.

The Knight Frank index found that prices grew by 3.1 per cent in June – the highest rate since records began in 1976. But this growth was fuelled by a rise at the top end of the market, according to analysts.

With interest rates continuing to rise, there are signs that the market is beginning to cool, despite average prices in the capital now standing at more than £330,000.

Properties worth £4 million or more saw price rises of 43 per cent over the course of the year as a whole, but increases for properties worth less than £1 million actually fell slightly, to 1.6 per cent.

"Over the past three months price growth in the sub £1 million price category has eased possibly reflecting the recent interest rate rise and the sensitivity of this part of the market to general economic trends," advised Liam Bailey, head of residential research at Knight Frank.

"In June alone, the number of applicants to the number of properties available has fallen by 5.5 per cent, implying an improvement in relative supply," Mr Bailey added.

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