It’s a curse to be so beautiful and in demand: the £100 billion London property boom has produced a demand surplus for properties, growing about 8 times faster than the supply of London houses and forecasts of higher property prices in the years to come. London’s property prices has been aggressively growing for some time: the Savills study into London property prices has found that house prices increased by 9% from 2003 to 2013, and that the houses aggregate value in 2013 was £1.24 trillion compared to £662 billion in 2003.
It is no surprise that London is the safe haven of the world for investing in properties. Turbulence in other emerging markets has made London seem even more attractive in the eyes of foreign investors. London’s tourism figures has also surged 20% in Summer 2013 for Wimbledon and the Uk’s Office for National Statistics has shown greater consumer spending and interest in London’s attractions such as the British Museum, St. Paul’s Cathedral and Tower of London. The attractions, desirable amenities, varied night life and low crime rate have all contributed to the investment desirability factor. London is also the most powerful financial hub in the world, according to the Global Financial Centres Index 2013.
All of the above tries to explain London’s desirability in the eyes of foreign property investors. What happens then to the properties purchased by the super wealthy and those confident in the future growth of London? A third of properties bought by foreign investors in London are not inhabited, in other words empty with no tenants or even squatters.
According to a spokesperson for Jones Lang LaSalle, there is a real concern about the deterioration of social relationships in affluent inner London areas. There is no sense of community in areas such as Belgravia SW1V, South Kensington SW7, Kensington W8, and properties around One Hyde Park SW1X. Buyers of high end properties do not use the properties for themselves, and neither are they willing to rent it out. The quiet, empty houses on a street of similarly empty houses have created areas similar to a ghost town in London.
But instead of an Old West ghost town, the houses in these affluent ghost towns are immaculate and have staff overlooking the maintenance. With the prices of these houses going into the millions, punitive measures such as vacant property tax would do little to deter absent owners.