Market Comment
An Experienced & Independent Bespoke Service

September 2010

Whilst the significant prime central London property price increases during the first quarter of this year may have been perceived in part as a confidence in signs of the first green shoots of economic recovery, it was in greater part due to greatly constrained stock levels. As prices for prime central London property were seen to be approaching the peak levels seen before the “crash”,  the supply of property coming to the market grew and that, along with the depreciation of the euro, eroding the exchange rate advantage for an important source of buyers, we have seen prices settle again. This can be confirmed by looking at annual price growth for prime central London to the end of June 2010 standing at 12.3% but for the March to June quarter growth being just 0.6%.

What of the future? Due the weakening of the global stock markets over the first six months of 2010 some of the wealth gains of 2009 have been depleted. Correspondingly, transaction levels in the prime markets of central London have eased and we expect this easing back in activity to lead to a softening in the prime markets during the latter quarter of this year. Having said that we do not expect it to be as deep or prolonged as was the case in 2008. We are not waiting for the other shoe to fall. Barring a second global financial crisis or other world disaster, we believe the “second slip” will prove relatively short lived too. Importantly, for dollar-based currencies, including those of Asia, the exchange rate advantage remains. 

What does this mean for our buying clients? There would appear to be more stability in the London prime residential property market than we have seen for quite a considerable time. However, different parts of the market (sub-£5m and £5m upward) are likely to respond quite independently and whilst there may be some small % drop in prices for some markets, growth in others may continue but hopefully at a far more balanced pace. At the end of the day whilst we do not have a crystal ball to predict property prices for this time next year we see the next 6 months, particularly, as a window of opportunity.

Whatever the next 6 – 12 months brings we look forward to negotiating hard on our clients’ behalves to achieve their purchases on the best possible terms.

Sarah Van der Noot – Managing Director, London Property Search.

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