Experts are predicting the end of the London house price boom, as uncertainty over Brexit and weaker consumer spending affects demand.
London has attracted significant foreign investment, as the economy has recovered and continued to grow since the last recession a decade ago.
There is strong demand in London for more affordable homes, but many Londoners have been priced out of the market.
â€˜Ghost towersâ€™ of luxury new-build flats, mostly priced at over Â£1 million, are failing to sell – leaving 400 towers yet to be built and 14,000 unsold apartments on the market at between Â£1,000-Â£1,500 per sq ft, while the UK average is Â£211 per sq ft.
With such a surplus of properties being built and not being sold, perhaps the new house builders, their lobbyists and the government can house homeless people in these empty properties. If the developers want to sell these properties, they need to drop their prices or be prepared to hold onto them for years.
One agency specialising in newly built homes for investment has seen a huge change in the buying habits of overseas buyers. Mostly Asian and Russian investors bought â€˜off planâ€™ in 2015/16, expecting to â€˜flipâ€™ (buy and sell without moving in) the properties, making big profits in the process. However, many have only been able to sell at a loss â€“ in some case in the hundreds of thousands of pounds.
UK housebuilders, too, have benefited for years from rising house prices and government incentives, earning them massive profits and bonuses.
UK inflation is predicted to be higher than house price gains in 2018 and 2019, and in London may fall by 0.5%. Homeowners unable to sell their home at the price they hoped for can simply stay put, but the investors behind the large apartment blocks won’t be able to afford that luxury.