House prices in London are seeing a rise in a mini-bubbleÂ renaissance thanks to the return of the city bonuses and overseas property investors taking advantage of the weak pound.
Many house sellers and estate agents across Britain who have no or little exposure to the London property market are left scratching their heads as to where the widely reported house price rises are being realised.
Indeed there are many house price rises recorded outside of London in the high end of the property market but London is an economic country in its own right.
As most people know, London is the home to the financial hub of Britain and the centre of our banking industry and therefore the one region in the country that has been propped up through the bailouts.
Many foreign investors have seen massive falls in the U.K. property market and have had their sights firmly fixed on London which saw some dramatic falls last year.
For someone looking into the U.K. whose savings are stored in a currency that has out performed sterling, the property market in the U.K. looks like choice pickings with up to 40% reductions from their perspective.
So investment in the region that has seen its industry (The banking industry) propped up by taxpayer's money must look like an awfully attractive area to buy prime property if you are a foreign investor.
The North of England where prices have been worst hitÂ have also seen some rises in house prices, but again this leaves the question open to debate, who can afford these houses when unemployment in these areas is increasing and the deposit needed for houses is way beyond the reach of the people who live in those areas?
According to RICS,Â 95% of London estate agents reported a rise in prices as opposed to a fall, I think these figures speak for themselves and demonstrate the huge division between London and the rest of the country.
If we wish to see a clearer picture of Britain we must first remove London from the national house price increases or decreases. To include a single region that has been made almost immune to the effects of the recession by its bailed out industry is folly and only goes to fudge the stats for the rest of the country.
The true prices in desirable residentialÂ rural areas where retirees from the city and second homes for city workers are buying must also be questioned. Their value is a current one based on an industry which would have failed had it not been for the bank bailouts.
Although it may be true that banks failing would not have meant the end of the banking sector, a huge restructuring of the industry would have taken its toll on employment and confidence within that industry, leaving the prime property in desirable locations as vulnerable as the rest of the country to the ravages of the credit crunch.
The problem with areas where second homes have out-priced the locals are twofold+
Firstly, locals who live in areas that have seen wealthy outside buyers pushing the prices up, cannot afford to live there any more.
Secondly, the children ofÂ the wealthy buyers cannot afford to buy in that area unless the flow of wealth has been sustained within the family so as to allow the parent's wealth to buy a home outright or help with the deposit to purchase a home for their children.