What are the key factors of the supply and demand of the London housing market ?
Exploring what drives new builds in London as well as what drives demand from domestic and foreign buyers #ukmortgages #pompompricing
The London housing market (of around £1.9 trillion), which is allegedly the GDP size of France12 is driven by the supply (i.e. the number of dwellings in London) and the price of each home, representing the demand.
To date, the figure of £1.9 trillion comes from average number of London dwellings of 3.67 million multiplied by average home of £516k. To untackle the drivers of supply and demand let us explore each part.
Supply of London Housing
The supply of dwellings depends on the number of new builds (e.g. new flats or homes) or conversions of existing large homes or offices into residential dwellings. To date, there are 3.67 million dwellings in London, from an original 3.3m in 2012, representing only a 9% increase.
Source: ONS
Demand of London Housing
Demand of London Housing will depend on a few key factors such as the size and number of mortgages available to buyers as well as taxation or regulatory hurdles. For example, significant stamp duty or HMRC making it harder for individuals to secure non-domiciled status would lead to a decrease in demand (amongst other factors). In contrast, a decrease in stamp duty, or a stamp duty holiday or a more favourable tax environment might encourage foreign buyers.
Further Readings
Look out for my space for further topics and discussions on exploring the key components of supply and demand for the London housing market which will be explained in future posts.
https://uk.finance.yahoo.com/news/london-property-combined-value-equivalent-061300779.html
https://www.standard.co.uk/homesandproperty/property-news/london-property-value-equivalent-economy-france-b976359.html