Residential property prices in the City are rapidly rising to match some of London’s most expensive areas, and could catch up with the costliest parts of the West End in just five years’ time.
Typical house and flat prices in the City were 60 per cent lower than their equivalents in the ultra-prime areas of Mayfair, Kensington and Knightsbridge in 2008, as the financial crisis hit.
But now prices are just 30 per cent lower and could catch up within five years on their current trajectory, according to CBRE.
According to the property adviser, the average price of a flat in the City is now £850,000, not far shy of the £1.1m typical price tag in the three dearest parts of prime London.
A report released this morning says that prices in the Square Mile have risen by an astonishing 70 per cent in the last six years alone, despite the effect of the market crash.
The report shows the high demand for the new developments in the area, with 96 per cent of units in the Heron selling before the building’s construction.
There are currently three large residential schemes underway in the City, and 555 units have been started since 2009, according to CBRE. However, over the next ten years the group thinks that supply will barely meet a third of new demand.
In 10 years’ time, there will be demand for another 2,615 units, but only around 838 will be supplied, a shortfall of 1,777.
The research also identifies five districts adjacent to the City which will benefit particularly from a spill-over of demand – Shoreditch and Hoxton, Clerkenwell, Wapping, Whitechapel and Bethnal Green.
For example, in Wapping, the number of house and flat sales has surged by 188 per cent in the last five years, powering through a period which has been a slump for property markets across much of the UK.
“Development is higher in the City fringes, with around 2,500 units under construction and a further 4,500 in the planning pipeline. But, these levels remain woefully short of demand,” said the report’s authors.