Lack of new homes underpins London property prices

Despite the recession residential property prices in London continue to buck the national trend and continue to rise due to a fundamental shortage of new homes being built.

The latest residential report by CBRE shows that over the last decade London's population has grown by 850,000 whilst only 197,000 new homes in London have been built over the same period, adding to the supply-demand imbalance in the capital.

Many experts project that property values in London will continue to head north unless more new homes are built, including a rise in the supply of affordable homes coming onto the market.

Jennet Siebrits, head of residential research, CBRE, said: "We expect the housing market to remain subdued over the Olympics period with attention firmly focused on sports rather than property. Whilst it is hard to distinguish the impact of one off events such as the Olympics and Jubilee on the housing market, it is clear that the housing market is flat with mortgage approvals edging downwards and a corresponding dip in new lending. However, London is still a bright spot in the UK residential market with a lack of supply and strong interest from international buyers looking for a safe haven for their money underpinning house prices."