House prices in London surging at almost 20% a year

House prices in London are surging at a rate of almost 20% a year, which is five times the increase seen in in north-east England, according to the latest official figures.

The Office for National Statistics data also revealed that the annual rate of house price growth in England hit 12.2% in August – the highest figure for a decade.

For the UK as a whole, the annual rate in August was 11.7%, which was unchanged on the previous month but prompted the National Housing Federation to declare that with prices rising at this “staggering” pace, homeownership was becoming a distant dream for more and more people.

The NHF has issued a new report claiming that only Londoners earning more than £100,000 – three times the average salary in the area – could now afford a typical mortgage in the capital.

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Here is the statistics page published by the UK Office for National Statistics.

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Reading articles like these do make me feel that the prices in London have gone out of whack, way beyond what the average Londoner can afford.

Why is there so much demand for housing in London?  Well, London is the number 1 global city according to many independent rankings.  London is where many people want to work and live.

On the supply side, London just can't build homes fast enough, largely due to planning constraints.

Because the jobs are in London, the people working there have no choice but to rent in London. This bodes well for investors like me, however, I'd sure not be very happy if I were a Londoner.  Yet, there is nothing much the Londoners can do about it.

Thanks for reading.