Are London Property Prices Coming Down?

If you are having dinner with any young couples with small families then "prices are coming down" is a must have topic of conversation at all dinner parties.



For those of us who work in the industry we have heard it for 15 years.



Bankers will tell you "Its really happening this time!".



If you consider that property prices increased up to 40% in the last 8-9 months then a 10% reduction in asking prices is not exactly an indication that prices are going to come tumbling down.



Another way of looking at it is that prices went up by 30% in the last year!



If you talk to any central London agents right now they will tell you that they have stacks of very well qualified buyers all waiting to buy quality homes that they cannot find.



I recently got engaged and joined that list.Over the last 4 months of house hunting I can confirm there is little out there any anything worth while is snapped up.



The properties that are being reduced in price are those that do not tick the majority of the required boxes. They mostly belong to sellers who saw an opportunity to sell their difficult properties in a hot market.



My father always told me if you are buying a home and not an investment do not waste time analysing the market, find what you like and if you can afford it get it. One saying I heard was "you never pay too much just too early when it comes to prime London property."

Buying London Property after the sub prime crisis

Throughout the month of August the news that the financial markets were in a crisis was the subject of discussion amongst many property professionals and their clients from various holiday destinations around the world.



Selling agents were confident that the sub prime crisis that started in the US would have no effect on prime London property and buying agents were quietly hoping that the news will make it easier to acquire properties on behalf of their clients during the last quarter.



Generally, all agreed, that by mid September when everyone is back from their holidays and children have gone to school it will be the time to tell where the property market is heading.



Traditionally prime property prices go flat when the market cools down and not down. The last 6-9 months, however, have been exceptional times. We have seen between 40-60% price increases in some areas and with certain types of property.



This means that there has to be a correction. Under normal circumstances the increases that happened in the last 3 quarters would have taken at least 2 years to be achieved so a reduction is a mater of opinion more like a correction.



As city buyers loose confidence and talks of low bonus are going around, bankers will hold off making purchases with big price tags. They are a substantial source of demand for prime property.



Sellers cannot continue to ask inflated asking prices and have to either hold off or ask more realistic prices, this doesnt mean taking a loss but less of a profit.



The good news is that buying will be an easier task, the anxiety and race associated with buying is so last season! Foreign buyers and Web 2.0 millionaires can now shop in peace.



Next quarter we should see some fair deals as a result of over stretched property dealers and developers.



If however interest rates go into double figures over the next 12 months, then we will see a whole different scene, one that was certainly before my time!

Buying in London

Just as you think the London property market can not shock you, it does!



The last 9 months have been an extraordinary period for prime London real estate. Some properties have increased by as much as 60% in value.



Properties refurbished by developers are achieving record prices. Buyers are paying huge premiums to avoid the pit falls of refurbishing and the privilege of living in designer homes.



Increasingly, demand comes from buyers with nothing to sell. These are either foreign or affluent couples deciding to live together and keeping their own homes as investments.



A buyer, in prime London, will have had a fair share of disappointments by now. Competition is fierce and sellers can’t even commit to an asking price most things are in the region of……or in excess of and so on.



A growing number of educated buyers have realized that the best way to find your dream home and not make an expensive mistake is to employ a professional to represent you and advise you.



Sellers also prefer buyers who are being professionally represented, it shows commitment.



One agent said about September 07 " prepare for a money war!" the talk is that hedge funds have paid a lot of money out this year so hefty bonuses are on the horizon.



So long as London remains a vibrant and multi-cultural city with a financial centre,real estate will remain strong.



Prime London property is always on the shopping list of the rich and powerful.

London Property Rentals & Sales Update

There is a shortage of properties in the rental market, owners tempted by strong prices have sold their investments. This is especially true at the very top end of the market.



Only six months ago agents were talking about sales prices starting at £1000 per square foot, now agents say “asking in the region of £2000 per square foot” and with such acceptance!



The sales market will slow down, however it may be temporary. Once children are back in school the buyers will be back and soon to follow the city bonus will have an impact.



The strong sales market has resulted in a shortage of supply; landlords of properties in excess of £3000 per week are holding out for their asking prices and in many cases getting them. Usually with a number of parties interested.



These highly fueled sales prices have resulted in the lowest rental yields of recent times. If interest rates keep rising, rents will follow.



As rates go up less people buy and more people rent hence prices will go up.

Prime London property prices follow different rules to the rest of UK

Following a number of interest rises by the Bank of England property prices of London's best homes have still not seen a slow down. Six months ago agents were talking about prices starting at £1000 a foot (appx £10,000 a meter) and now London's best properties are pushing towards £2000/ a foot.



The top end of the market is fueled by foreign investment; in excess of 50% of properties over £2 million pounds are sold to foreigners. Mostly this demand comes from people who have nothing to sell resulting in a further shortage of stock hence keeping prices strong. Globally, as emerging economies grow and people become wealthy, many aspire to own property in London's best streets. One agent told me recently that he was house hunting with a Mongolian investor looking to buy a £12m home!



We have yet to see the effect on prices as a result of demand from China, India and Brazil.



Those who own London's best homes can also afford to hold on to them so don't expect to see any bargains any time soon. If demand softens prices will just go flat rather than down in London’s best addresses. Sellers will simply sit tight and wait, they can afford to.



London's mature rental market also provides an attractive option for many unwilling to sell in a weaker market. Traditionally as interest rates rise, rentals get stronger. A recent report conducted by the National Association of Estate agents confirmed that the average time a rental property stays on the market is down this year compared to same time last year.



That’s the word on the street, what the agents are saying.

London property and new regulations

Finally; much needed regulations are coming to the property industry and for those of us that have found the old ways frustrating it’s a delight.



On the 6th April 2007 the tenancy deposit scheme was introduced. In simple English this means that all tenant's deposits (for assured short hold tenancies) are to be held in a custodial or insured scheme. Landlords are obligated to ensure that deposits are released within a set time and any disputes are handled by qualified arbitrators. Failure to comply will result in heavy penalties and may also have legal implications on the tenant's obligations.



More information at:



http://www.direct.gov.uk/en/TenancyDeposit/index.htm



1st June 2007 will see the introduction of HIPs, the home information pack. This means that any property that comes to the market after this date must have a home information pack or face a fine.



A HIP must have: details of the title to the property, local and water searches, details of leasehold information and an energy certificate.



It is estimated that close to £350m is lost each year from aborted property transactions. Buyers offers are accepted and then the facts about the details of the transaction are realised, the process takes an average of 6-8 weeks. This results in many transactions being aborted at a huge cost to all parties.



More information at:



http://www.homeinformationpacks.gov.uk/consumer



Still no sign of the government requiring all property agents to be licensed but hopefully that will soon follow! It is madness that people’s largest ever transactions can be handled by an industry that is not required by law to be qualified. The good news is that most reputable agents are self regulated and voluntarily belong to governing bodies like the NAEA (National Association of Estate Agents) and ARLA (Association of residential letting agents).

Is There a Bubble About to Burst?

What is happening to prime London property prices?



The word on the street is that prices can not go any higher; they have reached a level of ridicule now. That may be the case for the stock we are used to seeing but there is still room for increase for the best of the best.



If you believe that prime London property has quarterly cycles, like we believe, then next quarter will see large number of new properties coming to market.



These properties will be the best there is and prices will be truly unbelievable. Some of the best properties we have seen over the last month have belonged to traditional English families who own exceptional properties in fantastic locations. For many, the long debated move to the country is now in motion.



Elegantly, cashing in and moving out.



Another interest rate rise however will certainly cool the buying frenzy and prices will stabilise. Properties will shift off the sales market and onto the lettings market with people choosing to rent rather than committing to buy.



Any risk taking speculators who bought at the top of the market, hoping to turn for a quick profit, will start to feel the squeeze and be forced to sell cheap or with little or no profit.



The best properties will not be part of this bunch as anyone who paid through the nose to secure the best did so knowing that they will be there for the long term.



Earlier this week we advised an old client, who was bidding on a property through another agent, that the difference between paying £10m or £12m will be irrelevant in 15 years time so buy it if you love it!!

Prime London Property is a unique market

Prime London Property is a unique market, always has been.


According to a Nationwide report released today; "December saw the largest annual rise in house prices for 22 months, with property values 10.5 per cent higher over the year".No doubt that is a correct statistic but cannot be applied to Prime London Property.In the last quarter of 2006 most agents that handle prime property will agree that we experienced a 10%-20% increase in property prices just in the last quarter of 2006.Comparing the UK property market with London's top addresses is misleading an inaccurate.The same nationwide report says that average house prices are now £173,746, well according to Hometrack the average price of a property in the Royal Borough of Kensington & Chelsea is now £930,000 and £1,300,000 for all prime London property, accourding to Lonres.com.So maybe if you multiply by at least 5, national statistics apply to prime London Property.Brought to you by property professionals at http://www.palacegate.com