1. Population growth
2. Unfulfilled construction potentialThe population density in central London (55 inhabitants per hectare) is lower than that of many European capitals like Madrid and Paris (286 and 213 inhabitants/ha respectively). According to Savills, the British capital has room for another 1.4 million new homes – approximately one million more than the Greater London Authority (GLA) has planned for over the next decade.
3. Dwindling vacancy ratesOnly 1.4 per cent of London homes are not permanent dwellings and vacancy rates fell 150 per cent between 2004 and 2014, even in the city’s upmarket districts. It’s true that very central and expensive areas have more empty homes (24.6 per cent in the City, nine per cent in Kensington and Chelsea and 5.5 per cent in Westminster), but this is mainly because yields on prime residential rentals are too low to be worth it (average 2.9 per cent annual yields).
4. Affordable housing initiatives
Property may not be “affordable” but cheaper credit, lower interest rates and government programmes are enticing people to buy. The help to buy programme supports new house purchases up to £600,000 in London with 40 per cent financed by the government (no interest for five years). This preferential rate means that a buyer can make a five per cent deposit and get a mortgage for the remaining 55 per cent. Another programme, Starter Homes, grants a discount of at least 20 per cent off the price for first-time buyers under 40. Plus, there's the Lifetime Isa – yet to be tested, but another part of the government's efforts to keep the property market moving. Read more: The fried chicken guide to house prices