Source: The Telegraph
London has overtaken Hong Kong to become the most expensive city for high end, new build property – which has now reached a world record at£2,000 per square foot.
The cost of a new build home, situated in the popular core of the UK’s capital, has risen by 16pc over the last year, according to a report by property group, CBRE.
The index has Hong Kong and New York in second and third place, with prime property costing £1,950 and £1,800 respectively.
Jennet Siebritis, head of residential research at CBRE, cites the intense supply and demand imbalance in London as the main factor driving up prices in the city, which has increased in population by one million people since 2004.
In contrast, the population of New York remained static.
“People under-estimate the supply-demand imbalance,” Ms Siebritis said.
“For an increase of one million people only 200,000 homes have been built. That’s a house for one in five people.
“The pressure on price is so acute.”
While supply was an issue a decade ago, she continued, London has now become an “international” city attracting global companies and their employees, increasing the intensity for new build apartments in the capital’s core.
Global prime property prices have risen9pc over the last year, compared to London’s 16pc.
As well as overseas investors stoking the housing market, the report found that there has also been a resurgence of domestic buyers – who now account for 52pc of transactions in the area.
Over the last 30 years, London property prices have rocketed by 231pc, with the switch from manufacturing to a services-led economy, and world status of the UK’s financial services industry, boosting real estate values.
CBRE forecasts 30pc growth for prime central London property over the next five years despite talk of mansion tax and the traditionally dampening impact of a general election.
However, over the last year, estate agent Strutt & Parker saw a 27pc fall in the number of sales in the prime boroughs of Kensington, Chelsea, Notting Hill, Belgravia, Mayfair, Knightsbridge and Fulham.
This confirms a raft of indices that suggest, after a year of rapid house price growth, high end property in central London is cooling in the short term.