Morning:
13°c
Property slump? House prices in London just keep going up
Jonathan Prynn, Consumer Affairs Editor09.01.08
London's property market has got off to a surprisingly upbeat start to the year with buyers returning in numbers after the turmoil of last autumn.
Estate agents said today last month's interest rate cut and City bonuses being down only around 10 per cent on the previous year's record has breathed new life into a market that was in danger of falling into a slump.
If the Bank of England decides tomorrow to lower the cost of borrowing further - as expected by many City economists - it will help the revival.
Peter Rollings of Marsh & Parsons said: "The last quarter of last year was very poor, characterised by a severe lack of new buyers and existing buyers sitting on the fence waiting to see what was going to happen with the market. There was limited volume and prices were down by two or three per cent.
"But this year has started surprisingly well with plenty of new buyers coming into the market and plenty of offers being made, although very few actually agreed."
Agents say the double-digit rises across much of the capital last year are unlikely to be repeated and the market overall will do little more than tread water. But inevitably there will be "hot spots" where prices continue to rise strongly.
Andrew Weir of Foxtons said: "The busiest are the real blue-chip areas. The better the address the more likely there is still strong demand. Even in areas such as Notting Hill and South Kensington it is the highly sought after streets that buyers still want. Properties in those streets don't come up often."
He said other west London areas likely to do well this year include north Kensington, where David Cameron lives. It has been boosted by the westward extension of the congestion charge zone, which gave residents a 90 per cent discount. Another hot spot was west Kensington and Barons Court, where the grandeur of the houses compares favourably with the smaller homes in much of Fulham.
Some agents say Bayswater, long seen as the poor relation of neighbouring Notting Hill, is set for a revival this year. Alex Thompson of Winkworth in Notting Hill said: "It has always been a very strong location, benefiting from both the attractions of Notting Hill and the transport links of Paddington.
"Architecturally, it features similar stucco-fronted terraces to some of the most prestigious streets of Notting Hill and boasts lovely garden squares. However, it has been overlooked by many in favour of its more popular neighbour."
He said Bayswater's gradual improvement was sealed by the opening late last year of two restaurants: Rowley Leigh's Le Café Anglais and Tom Pemberton's The Hereford. He said: "Both were instant successes with tables booked up well in advance."
In north London, Camden appears to be the hottest spot, with prices up 1.7 per cent in November alone, according to Land Registry figures. Charles Webb of agents Camden Bus said: "In the first three days we worked this year we sold one flat for £400,000 cash - the full asking price - and had two offers - one of them for cash. December was our second best Christmas ever. If it carries on like this we are laughing."
In the East, Dagenham remains a vibrant property market, largely because of its affordability.
Gerry Toor of Hanson Estates in Ilford said: "It is virtually the only place easily commutable into central London where you can still find homes below the stamp duty limit."
Andy Smith of 1st Property Investment Ltd said: "In addition to the established markets, many emerging areas of London will experience capital growth this year, such as regeneration areas in Romford, Woolwich and Barking."
Miles Shipman of property website Rightmove.com said less desirable areas, such as Hackney and Tower Hamlets, would perform less well because "there will be great supply when the market gets flatter".
Mr Rollings said there were types of property likely to achieve good prices, including one-bedroom flats on a first floor or overlooking a garden square, two-bedroom flats with high ceilings and perhaps a garden or roof terrace and family homes on streets where the houses haven't been split into flats.
Reader views (9)
The basic law of supply and demand is busy proving the fact that there are not enough properties available in London so why the surprise that London prices continue to rise? Of course there will be a point where economics have an influence but clearly we are not there yet and certainly no one knows when we might be. Too many pundits too much hype either trying to talk the market up or down.
- Alan Rugg, London
I think its amazing how Andrew and David know more about the economy and housing markets than the rest of the country. I wish I had their crystal balls and could predict what is going to happen in the future!
- Jenny, London
What a Load of Hype just before the last CRASH same old people trying to pump up the market. Hardest thing was getting young people to believe this is a 2 year unwind of over inflated assets world wide.
- Eddie, London
Central London should not be to badly affected by the slump in house prices, in fact I expect central London prices to increase over 2008 by 8%. However the boroughs on the outskirts of London will probably see a slight reduction in prices probably 3-5% over 2008.
Home Information Packs, 10 year high interest rates, and the Credit Crunch = Fewer properties for sale, Lack of affordability and Buyers lacking confidence investing in property.
All the signs are that prices will reduce nationally over 2008 by at lease 10-15%
NOW is the time to buy in London Make offers in the region of 10-15% below the price a similar property SOLD for back in August or September 2007 you will be surprised how many desperate sellers will agree to sell.
Let’s all make some serious money!
- Darren, London
I think that there will be a slow down as we are seeing, however London will only level off, as demand to live in London is just as high as it has ever been, The Property Market is a Cycle.
- Paul, Camden London
Does this nonsense really sell more newspapers? Personally, I've stopped buying papers with headlines of this type. If information about property prices is so distorted and misleading (we can all see the reality around us - properties stuck on the market for weeks, prices dropping on rightmove etc) I can't trust the accuracy of the more serious news in there.
- Clive, Chichester
Wow, I mean wow how long is it before they realise we don't take onboard their property hyping. The crash is starting and anyone who bought in the last 3 years can look forward to at least 30-40% negative equity. Glad I am in Devon in well paid recession proof job that will give me the position to buy a nice 3 bed in the country for £120k once all the second homers abandon the place to concentrate on paying off the mortgage on they're London homes.
- Andrew, Exeter, UK
"In the first three days we worked this year we sold one flat for £400,000"...
Big deal, they sold a flat. This doesn't mean the property market is going up!
- Simon, London
Why do the vested interests keep hyping the property market when all signs are that is on a downward trend i.e. falling volumes, lack of credit. The financial services sector in London is facing increased redundancies and the rest of the UK economy is grinding to a halt as consumer spend slows.
- David Barker, Maidstone
