There is a real danger of a house price bubble in London. Discuss Essay - 2

There is a real danger of a house price bubble in London. Discuss - Essay Example ms to be a danger in the house price bubble, which results from a combination of different factors and there are several signs that the property market in London may be headed to an adjustment. The house prices in London seem to be changing each and every day and barely does a week go without the good news that the prices will supposedly rise. This is as a result of the investment circle spreading through the major towns of London. There have been other optimistic predictions that the prices in London to go up by about 40% according to Knight Frank. There are several factors and evidence that shows that show prospect for a real danger in the housing industry. Buyers from outside London are limited but are an important part of the housing market. The urge from these clients for new homes has catalyzed the current building of the luxury apartments (Barkham, 2012). Despite all these, changing the world economic conditions together with tough government controls on some important things like the visas threatens London housing industry. (Balling, 2006) If there will be a halt in the buying of houses by foreigners in London, it may result in a significant drop in demand and supply will increase reducing the price of the houses. The erection of new houses contributes for majority of the upcoming house stock, but they have a limited life on the market shelves and will appreciate slowly than the existing counterparts. More so, newly constructed buildings tend to a little bit expensive compared homes per Unit Square. London is expected to experience an increase in the number of new homes in the recent years, which threatens the house supply and demand in the country. The new homes will help in the elevation of Londons property prices near the future but may lead to long- term effects on the market prices (Barkham, 2012). There is a gradual appreciation in the house prices in areas where there have been new buildings, but this, in the long run, comes down, and foreign