London Housing Bubble No UK Bubble

London is at risk of a housing bubble – with average house prices more than three times higher than in Northern Ireland or the north east by 2018 — but the rest of the U.K. looks set to escape wild gyrations in the property market, according to a report by consultancy EY.

“Prices in most regions are below previous peaks in cash and real terms,” the EY ITEM Club Special Report on Housing noted. “Both affordability and household debtlevels look much better than before the financial crisis.”

However, it added: “The exception is London, where limited supply and strong demand have driven price-to-income ratios and income multiples back to previous highs, signaling the potential for overheating.”

U.K. house prices rose at their fastest rate in over four years in December, according to the latest data from the U.K.-based Nationwide building society. House prices in the U.K. rose 1.4 percent in December and were 8.4 percent higher year-on-year, with the single-month increase the biggest since August 2009 with London house prices leading the trend, having risen 14.9 percent year on year.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza