The highest London house price growth occurred when the country was under Margaret Thatcher and Tony Blair, according to new analysis from estate agent Stirling Ackroyd.
Recently, we looked at what the new Prime Minister, Theresa May, will mean for the housing market: /will-theresa-mays-government-mean-housing-market/. However, it is expected that the Brexit could mar her time as PM.
A spiralling market
The average London home cost just £31,370 in 1979 when Margaret Thatcher entered 10 Downing Street. Just 11 years later, this had soared to £110,110 – a whopping rise of 251%. For each year that Thatcher was PM, house prices in the capital grew by an average of 12.1%.
But Thatcher isn’t alone in overseeing a spiralling London property market.
Highest London House Price Growth Under Thatcher and Blair
Tony Blair’s time as PM saw the average house price in London surge from £108,620 in 1997 to £335,040 just ten years later, putting him in second place. During his term, London house price growth averaged 11.9% per year.
The Managing Director of Stirling Ackroyd, Andrew Bridges, says: “With great power comes great responsibility, but there’s one thing the PM can’t control – London house prices.
“Under Thatcher’s tenure, the property market was turned on its head – seeing dramatic house price growth in London. There’s always talk of spiralling house price growth in the capital, but compared to the 1980s, the rate of growth is lagging behind.
“Even the boom years under Blair couldn’t keep up with this pace of growth. Under New Labour, London’s property market reached new heights and became a global competitor. As demand soared, so did prices. Places like Shoreditch became solid investments and a buy-to-let surge started, with those properties snapped up still returning a profit today.”
Recessions bite
For PMs that governed during a recession, it’s been a very different story. House prices in London fell by 1.4% between Thatcher and the end of John Major’s term. In 1991, the average home in the capital cost £110,110, falling to £108,620 at the time Major left office. However, financial difficulty prevented buyers from taking advantage of the drop in house prices.
Similarly, Gordon Brown, who inherited a sharp global recession, also oversaw negative house price growth during his time as PM. When he entered No. 10 in 2007, a typical London home cost £335,040. By 2010, property had become more affordable, at £332,720.
One of the world’s most expensive cities
David Cameron’s time as PM saw the price of a London home increase by 53%, as the capital became a safe-haven for international property investors. In 2010, buyers paid £332,720 for the average home, rising to £507,880 this year.
Bridges concludes: “Buyers in London have paid the price under Cameron’s leadership. House prices started rising swiftly again, and, despite a return to strong economic growth, affordability has become the number one issue for Londoners. Once again, the supply of homes could not keep up with demand and economic growth.
“If the pattern developing over the last 38 years is anything to go by, Theresa May could face a static London property market. The City’s property sphere has been pushed to its limits with new legislation and political events in the last. But there’s a new advantage – London’s property market is more resilient and probably the safest real estate investment globally. The comparisons of May and Thatcher have already begun – but London’s property market can be tamed by no one.”