The recent Deloitte commercial property survey for central London revealed a 24% increase in the last six months of office space under construction. According to the report 9.5m sq. ft. of office space is being developed of which 4.4m sq. ft. is new construction. This is the second highest increase in the last twenty years. Some 37% of this space has already been pre-let. This increase in office construction is also being accompanied by a large number of private residential towers to satisfy the demand for accommodation.
There is also very good news outside London with several high profile businesses announcing their intentions to relocate out of expensive central London. While rental income improved at all levels, London still outpaced the rest of the UK.
The residential housing market was stagnant due to uncertainty over the outcome of the General Election. Values of expensive properties were hit by the threat of a Mansion Tax. City prices fell in the run up to May 7th but have risen significantly since. The election of a majority Conservative government seems to have released the hand break on buyer confidence and activity in the residential property market. According to Rightmove the number of new sellers on the market has risen by 20% since the election.
The house building industry has warned that if house prices surge again on the back of continuing low interest rates, insufficient supply, and a burgeoning population, it will become unaffordable for young people to live in parts of Britain. It is predicted that property prices in the UK will rise by 22.8% over the next five years, but London and South East prices are expected to rise by 29.4%.