London property has been privileged to high demand despite the declines being seen elsewhere in the UK.  Experts have continuously pointed out that the average house price indexes for the UK have been helped out due to the averaged in levels of growth recorded for London.  It was thought that much of the demand was due to the 2012 Olympic Games but a recent study has indicated that demand will continue to remain high and that demand will outpace the supply of property over the next decade.

The Knight Frank’s London Development 2012 report was conducted using the latest census data.  That data along with the expectations of developers suggests that an average of around 24,000 units per year could be built over the next decade but there will be a demand for an extra 37,000 units per year over the next decade.  This will push London house prices upward with prices rising above market value in other UK areas tipping the overall housing market.

Grainne Gilmore, head of residential research at Knight Frank remarked on the findings saying, “Our figures suggest that overall undersupply will continue to be a feature of the Greater London market. The shortfall in planned housing is around 36% over the next ten years. In central London, which incorporates many of the prime central London postcodes, the shortfall rises to 55%.”

There is encouragement issued in the report that new housing needs to meet demand of the overall housing market and not be tempted to meet the demands more fully of higher priced buyers. 

Liam Bailey, head of residential research at Knight Frank said, “Developers should temper their expectations according to the nature and location of each site. The biggest shift may need to be to the current mind-set that they need to build, in every part of London, bigger units to maximise pound per square feet values.”