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Property prices up 0.8% in England and Wales, official figures show

The Land Registry's flagship House Price Index shows an annual price decrease of 1.3%. But this masks huge prices rises in some part and falls in others. For example, London has seen property prices increase by 5% year on year but the North East of the country has seen prices fall by 8.1%.

The report also shows that during February 2011, the number of completed house sales in England and Wales decreased by 10% to 38,336 from 42,515 in February 2010. The number of properties sold in England and Wales for over £1 million increased by 14% between February 2010 and February 2011, from 399 to 454.

According to experts it is overseas buyers who are fuelling the property price boom in London and are also pushing up rents.

According to Anita Mehra and Marc von Grundherr, directors of one of the largest lettings agents in London, Benham and Reeves Residential Lettings, investors consider this to be the perfect time to buy a London property, thanks to a unique combination of factors.
‘The exchange rate is a driving force, making many homes 20% cheaper than in 2006. Strong rental demand is another, with London remaining a focal point for global corporations, attracting increasing numbers of overseas executives here on secondment,’ said Mehra.

‘Adding to the demand for rental accommodation is the growing number of international students (around 285,000, some 25% more than two years ago), with many investors buying a property for their sons or daughters coming to London to study,’ she explained.

 The current shortage of rental accommodation with around 10 applicants for every available property, is prompting an increase in rents which have risen by over 10% in the last year. Properties are letting quickly, particularly in new developments like Pan Peninsula and The Landmark in Canary Wharf and with shorter void periods landlords are seeing a steady increase in yields.

Demand is also fuelled by continuing mortgage restrictions and a shortage of new homes being built meaning that young professionals are still forced to rent as they are unable to get onto the property ladder.

‘And of course, London has traditionally been viewed as a safe haven for property investment, offering capital appreciation together with good rental yields. Its desirability has increased even further following the recent political turmoil in the Middle East,’ added Mehra.

Current red hot locations include new riverside developments like Imperial Wharf and Chelsea Bridge Wharf and traditional period conversions in exclusive areas such as Knightsbridge as well as smaller units with easy access into the West End and City like Beaufort Park in North West London and the new Mojo building near the Olympic village.