E prices in the capital are increasingly detached from those in the rest of the country as international wealth pours into London, according to a report from real estate adviser Savills, published today.
Central London prices are set to grow by 22.7 per cent over the next five years, the report predicts, as over £4bn per year flows into the capital’s property market.
Nationally, prices are forecast to slip by two per cent in 2012 and rise by six per cent over the next five years.
The Confederation of British Industry (CBI) suggests two measures to help the housing market.
In the short term the body has called on the government to introduce a mortgage indemnity guarantee scheme to help first time buyers with low deposits.
As a longer-term measure, it believes measures to reduce the regulatory burden on builders and free up the planning system would boost supply and lower prohibitive prices.
Some encouraging signs may come from the buy-to-let market, nationally. In the third quarter of this year the market grew to its largest since the first three months of 2008, according to the Council of Mortgage Lenders.
Lending rose to £3.8bn up from £3.2bn in the previous quarter, with 34,500 loans advanced.