The housing market - London

There's no prizes for guessing that London is still the most expensive place to live in the UK, and property prices here are continuing to fuel the market as a whole. According to Fionnuala Earley, chief economist for Nationwide:

"London, in particular, will lead the English regions.  Demand in the capital reflects both strong local economic conditions and the preferences of wealthy overseas investors."

 
1. The statistics

• Average price of a property in London: £335,658

• Monthly change: 1%

• Annual change: 15.3%

2. The outlook

• High demand

As Hometrack's Richard Donnell predicted, people already on the ladder are moving less often than before - only every 18 years. This means that properties, particularly larger sized homes, are more and more in demand but increasingly hard to come by, driving prices up. There has also been an increased interest in the London property market from overseas investment.

•  Lack of housing

The need for more houses is a growing problem throughout the UK and is particularly pronounced in London, driving prices up further. According to the GLA, there is a requirement for 35,400 homes a year in London in order to clear the backlog of those living in unsuitable housing and to provide homes for London's growing population.

•  Affordability

Supply and demand defecits are creating an affordability crisis in the capital, particularly amongst first-time buyers. According to a study by the Joseph Rowntree Foundation, 46% of younger working households in London cannot afford to buy a property even if they were to move to a cheaper neighbouring area, and 56% cannot afford to buy in the area of their choice.

 
3. Place to watch

The Olympic redevelopment zone in East London. With lower than average prices in the previously neglected East End, this area looks set to boom as 2012 beckons.

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