A Feeding Frenzy for London Homes Triggers Talk of a Bubble

Katy Barnes bought her home a year ago to avoid rising rents. Holly Martin purchased hers in October 2012 as an investment. Now they both regularly check a real estate website where they watch the value of their properties rising. Kay Durrant used the increased value of the home she’s owned for 30 years to pay bills by refinancing. CPC Group sold a penthouse appraised at almost $300 million in its One Hyde Park complex.

They’re all part of London’s frenzied property market, where prices rose 17.7 percent in the 12 months through February, according to the Office for National Statistics, and a typical home now sells for £458,000 ($772,000). There are bidding wars for patches of grass, parking spaces, garages, and sprawling mansions. “There is a fixation with housing, house prices, and the housing market,” says Mark Clare, chief executive officer of homebuilder Barratt Developments. “You’ve got six years of demand that’s coming back.”