London house prices rose by 251 and 209 per cent respectively during Thatcher’s and Blair’s time at Number 10 - but Theresa May’s reign “could be marred by Brexit” according to an analysis by London agency Stirling Ackroyd.
Research by the firm reveals that the average London home cost £31,370 in 1979 when Margaret Thatcher entered Downing Street. Just 11 years later, this had soared to £110,110 – meaning a cumulative increase of 251 per cent, equivalent to a 12.1 per cent rise each year while she was Prime Minister.
Tony Blair similarly saw the average property in the capital go from £108,620 in 1997 to £335,040 some 10 years later. Annual house price growth in the capital averaged 11.9 per cent during his premiership between 1997 and 2007.
“There’s always talk of spiralling house price growth in the capital but compared to the 1980s, the rate of growth [now] is lagging behind” says Andrew Bridges, managing director of Stirling Ackroyd.
“Even the boom years under Blair couldn’t keep up with this pace of growth. Under New Labour, London’s property market reached new heights and became a global competitor. As demand soared, so did prices. Places like Shoreditch became solid investments and a buy to let surge started, with those properties snapped up still returning a profit today” says Bridges.
However, Stirling Ackroyd’s research shows that London prices dropped 1.4 per cent between Thatcher and the end of John Major’s premiership. In 1991, the average London home cost £110,110, dropping to £108,620 at the time Major left office – but economic downturn prevented buyers from taking advantage.
Likewise Gordon Brown, who inherited a sharp global recession from Blair’s tenure, also experienced negative house price growth during his time as PM. When he entered office in 2007, £335,040 secured a London home. By 2010, the average was £332,720.
David Cameron’s tenure - despite much talk of austerity and downturn - the price of a London increased by 53 per cent “as London property became a safe-haven for international investors” according to Bridges. In 2010, buyers were paying out £332,720 for the average London property but this has since climbed to £507,880 in 2016.
But he warns that it is highly likely that Theresa May could face a static property market during her term in office which, Stirling Ackroyd warns, “could be marred by Brexit.”
“The City’s property sphere has been pushed to its limits with new legislation and political events in the last [period]. But there’s a new advantage: London’s property market is more resilient and probably the safest real estate investment globally” says Bridges.
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"London house prices rose by 251 and 209 per cent respectively during Thatcher’s and Blair’s time at Number 10"
That's not a good thing or something to be proud of, that's absurd. Thatcher, Blair and Cameron all failed to bring house prices under control and all failed to deal with the housing crisis. May won't be any different. Prices might dip a bit because of Brexit, but it still won't make it any easier for first-time buyers to buy if there aren't enough new homes. The government has talked plenty about new homes and affordable housing, but they have failed to back it up. May has talked plenty in speeches about the need for more affordable homes, but I don't have much faith in this government improving on their appalling record thus far when it comes to housebuilding.
If some actual homes were built, if empty homes were brought back into use, if brownfield sites were used for affordable - actually affordable! - housing schemes, then we might start to actually solve the problem that goes right back to Thatcher and her disastrous Right to Buy initiative (something the Tories are still trying to flog).
Maybe if the Housing Minister had a position in Cabinet some action could actually be taken, but I'm guessing Mrs May has more pressing concerns at this minute.
Nothing will change dramatically. The fundamentals of the property market have stayed the same. Until that changes, there will be no major dip in house prices.
Of course, the path we're headed on at the moment is unsustainable - prices can't keep rising and rising forever and ever, Amen - but until supply gets anywhere close to catching up with demand the situation won't be changing. Gimmicky schemes like Right to Buy, Help to Buy, Build to Rent, Shared Ownership and Starter Homes are not a long-term solution; the government know this full. Will they do anything to solve the housing crisis? Don't hold your breath. Not when there are millions to be made from all the luxury apartments springing up all over London, mostly purchased by the Buy to Leave Brigade.
Perpetual house price and rent rises are good for no-one. It will hit a ceiling at some point, but the government will be keen to keep that ceiling at bay for a while yet.
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