Analyzing the London Residential Property Market for Potential Foreign Investors

In today’s economy like in the past, housing has a profound and often unappreciated impact upon the lives of the citizens of each country. It affects almost our entire lives, from the quality of our lives, our health, and well-being. it determines not only our choice of transportation means but also our choice of work, and status (Baker 2003). Housing also affects our economic wellbeing, family structure, choice of friends and status in the society. It is with no wonder that, Abraham Maslow classified it under the basic need of shelter in his social pyramid.

Most often, investors see valuation as the first step toward intelligent investing. It has been argued (e.g. Penman 2003) that an investor can make informed decisions about where to invest once the value of shares is determined based upon the fundamentals. This is so because, without this value, investors can either buy high or sell low. Investors who trade on these stocks are often forced to ask themselves whether they are buying or selling at the right price. (Penman, 2003). In the face of this situation and their quest for an alternate answer, investors turn to various media including internet chat rooms, printed press, “talking heads” on television. ). In addition, investors consult investment analysts who provide an almost endless stream of information and recommendations to sort out. There are often claims that some shares are undervalued and vice versa. (Penman, 2003).

Against this background, the aim of this paper is to carry out an analysis of the United Kingdom London residential markets so as to enable investors to make informed decisions as to a buy, hold or sell decision. The next section provides an overview of the London residential markets.

Property prices in the United States, the US began falling in 2005 making sub-prime mortgage loans more risky as the borrowers are normally expected to exercise their options to default. Consequently, the US subprime mortgage market is suffering from foreclosures arising from falling real estate prices and borrowers exercising their options to default.