An apartment overlooking Hyde Park in London recently sold for $237 million, giving a glowing example of the craziness of London’s real estate market.
The city’s housing prices have skyrocketed 18% within the last year and it has both politicians and economists worried.
The apartment, which is speculated to have been sold to a foreign buyer, is still unfinished. It is approximately 16,000 square feet.
Londoners cite foreign buyers as a reason for this rising market price, making ridiculous investments in a market that has a high demand.
London Vs. New York City
A new report shows that over $676 billion has been invested in London real estate. This is approximately four times the amount that has been invested in New York City.
London is desirable due to a bunch of reasons — it’s vibrant culture, a growing economy and business scene, and the variety of green spaces. One aspect that is often overlooked, however, is the timezone — one which is located between Asia and the US.
Low interest rates and aggressive government incentives have also helped with the housing boom in London.
Dangers
The housing market in London is a bubble waiting to burst. Economists are considering raising interest rates later this year. Rates have not risen since July 2007.
These rapid price gains raise the chances of future debt growth. The low interest rates are no longer necessary for the London housing market.
