Fuelled by a convergence of ironies and unique circumstance the London property market is experiencing an unprecedented rental boom and a completely illogical performance across the other metrics. Now we have the 2012 Olympics on the horizon, which on top of the other things fuelling the rental boom, is causing a mad rush to buy up buy to let properties in London - you could say an Olympic sprint.
London's buy to let sector has always been one of the strongest in the country, and of course, that is within the UK which is pretty solid on buy to let as a whole (obviously with proper research into supply and demand), but now it is off the charts.
For years in the run up to the crash London property prices were soaring, and with each week, month and year less and less first time buyers could afford to make the first rung on the ladder, and so were forced to stay in the rental market thus strengthening buy to let investment.
Then the crash hit and you had thousands of people losing their homes and being forced onto the rental market. It would be nice if we could say that the crash then dragged down prices so more people could afford to buy, and it's true prices did fall and on paper more people could afford to buy. However, at the same time the crash had killed the mortgage market and now many of those who could afford didn't have a good enough credit rating to get a mortgage, and those who did couldn't raise the minimum deposit needed for their on-paper-affordable loan. Thus, the rental pool got bigger and bigger.
Now more than ever London is the place to be. We have the 2012 Olympics and the government spending billions on new stadiums and infrastructural upgrades. People are moving for work, you have people from around the world looking to book up rental property during the games and willing to pay a fortune.
As a result there is an Olympic sprint on to buy up quality rental properties in London. It is really like an Olympic event, with people from all over the world competing for properties. This is of course also fuelling the illogical performance across other areas, namely sales and prices. The UK housing market is a fragile and volatile place, but you wouldn't know it to look at London.
- Tuesday 29 November 2011