Ideal time to stake claim in prime location

Industry professionals suggest that Britain's housing market is recovering from the economic slump and recent updates indicate that the market is continuing on an upward trend.

According to Nationwide's monthly house-price index for April, the annual rate of growth hit double digits for the first time in almost two years and property prices rose by 1 per cent month-on-month. The building society says April's figures put house prices in Britain 10 per cent lower than during the peak of October 2007.

The low level of properties for sale has contributed to rising prices, according to Nationwide. Buy-to-let investors and homeowners have held on to their properties until prices begin to recover to nearer the levels seen during 2007. Nationwide says there is now evidence of some change in the supply and demand imbalance.

A recent report by Savills, however, suggests that the housing shortage will continue in the short- and medium-term, particularly in London, as the population grows. In addition, there is a lack of new-build developments. A recovering economy and employment growth in the financial and business sectors will exacerbate the supply and demand issue, industry professionals say.

Rental growth is expected to be strong especially in the prime central London market as a result of the expanding financial and business sectors, coupled with a lack of quality properties in key areas that attract workers looking to rent.

The Savills report forecasts that price growth for prime central London investment properties will grow next year and become even stronger in 2012.

This is good news for foreign investors, who tend to favour luxury new-build developments in prime areas of London.