Is London's Property Market Hike Sustainable?

The belief that London and the UK property market values will continue to increase has led many a property investor into troubled waters in recent times. Since the financial crash in 2008, the London market recovery has been something of a surprise but the rest of the country remains at a low ebb with prices of houses, flats and apartments considerably marked down from the peak. The government's Help to Buy scheme certainly appears to be leading to improved market conditions and concerns are already being raised warning of the dangers of overheating, particularly in the London area. The buy to let market for residential apartments in the London and South East area has however shown resilience in the face of the economic downturn. Among other factors I see this as a product of overseas investors and property investment on a commercial basis as a hedge against falling currency values resulting from Quantitative Easing. With the ratio of average house price to earnings still dangerously high, particularly in London and the South East, there lies a warning to would be property investors out there who might think the worst is over. Combined with the extension of the UK Government's mortgage guarantee scheme at the end of the year all of the warning signs are there. Residential property management commentators can be influenced in their views. Reports from estate agents and block property management companies for freehold and leasehold blocks of flats and apartments are no doubt set to ride the boom while it lasts. The service charge activities of leaseholders is a good indicator of the cash that property owners have available to them and many are frankly not in good financial shape. Leasehold property management agents get to see first hand how many leaseholders are struggling to make payments. Service charge and landlord ground rent arrears are certainly a problem in some locations. London property management problem spots include areas near Croydon and Lewisham and other inner London Boroughs like Lambeth appear to have also been affected. The credit crunch may seem a distant memory for the bankers however others are not so fortunate and still struggle for cash flow. Some simply cannot afford to pay and many leave it to the courts in the end where they defend their plight. In my experience the flat owners or leaseholders who are under financial pressure are simply more likely to default on their service charge payments than their mortgages. The perception being that the risks of service charge debt default initially seem less onerous. But all of those leaseholders currently feeling the financial pressures are vulnerable to economic pressures and remain sensitive to even the smallest of interest rate movements. A rate increase of half a percent can mean a significant percentage hike in net monthly mortgage payment. All of this questions the future growth prospects of the UK property market in the short to medium term. There are other factors to consider such as government stimulation in the form of Help to Buy and this might also in the short term hold prices artificially high.Demand may well outstrip supply, but if housing is simply unaffordable for most the fundamental long term movement is clear for all to see, I certainly think a few of the more cautious entrepreneurs might rethink their approach with the benefit of further careful consideration. Who knows what will happen and when but if we are faced with interest rate increases one day the effect will not be pretty.. Never say never but the recent talk of recovery in the market could well be a false dawn for UK property growth. VFM block property management is a property management company specialising in residential property management services for blocks of flats, apartments and private estates VFM are property management agents to landlords, freehold owners and leaseholders in residential blocks of flats and apartments. VFM's block management service standards are unique in their application, are Regulated by RICS, members of ARMA and Ombudsman Services Property. Article Source: http://EzineArticles.com/8078296