Real Estate Market UK: Development of prices in London

Seminar paper from the year 2006 in the subject Business economics - General, grade: 79%, European Business School - International University Schloß Reichartshausen Oestrich-Winkel (Department of Real Estate), language: English, abstract: Rental growth in London is rising at the fastest pace in 18 years. First-quarter sales grew 41% this year. As a result of this tremendous real estate sales increase, there is an eminent shortage of real estate, which leads to price explosions in this sector. Only in October 2006 the prices climbed about 2.1% which is a 12-month-increase of about 25%. Renting a six square metre apartment in Notting Hill costs about 800 Euros per month. Agents advertise with slogans like 'tiny, but trendy' and say that these apart-ments would be 'ideal for someone with an active social life outside'. A property which cost £ 100,000 about 30 years ago would today cost about £ 3.473 million, which translates into a total growth rate of 3,473%. The goal of this working paper is to figure out why there is still such a high demand for real estate in London, even it is one of the most expensive cities in the world. Further-more this working paper wants to show external aspects which drive the prices, and opportunities and threats which come along with this price boom.