Kensington & Chelsea property market does not follow the same rules as the rest of London let alone the rest of the UK

The average price of London property according to data obtained from the Land Registry and other governing bodies for August 2008, is £370,394 yet in Kensington & Chelsea the average price is £1,155,203.

Analysis from http://www.wheresmyproperty.com shows that in Kensington & Chelsea prices rose by 4.2% over the last month but London prices for the same period were down -2.8%.

Frustratingly the news is always about the big picture and never based on local areas within it. This results in confusing and often inaccurate speculation leading to long periods of deadening inactivity.

There is no doubt that the global economy is having a huge impact on the ability of prospective buyers but the dire news and tumbling financial markets are not having the same effect on prospective sellers in these areas.

In the areas of Kensington & Chelsea and Westminster we face very unique land ownership scenarios.

Between the Duke of Westminster, the Earl of Cadogan and the Crown Estate hundreds of acres of London’s most prime locations are secure and one could say, recession proof.

Digging further one will soon realise that the ruling families of the Gulf states also hold substantial property portfolios in these same prime locations. The Al Nahyans of Abu Dhabi, Maktoums of Dubai and Al Thanis of Qatar.

Trickling down the wealth tree are hundreds of other high net worth property owners in Westminster, Kensington & Chelsea who can comfortably afford to hold and wait. It seems unfeasible to hold your breath wait for crashing prices and desperate sellers.

In the profession it is widely agreed that there will be a 20-25% correction in asking prices over the next year. This still leaves owners in profit if they have had their properties longer than 2 years.

The overstretched developers, speculators and those who panic-purchased over the last boom period are likely to get hit and there will be some attractive deals to be done but only for the lucky few. Many buyers have no confidence or any access to funding due to the current banking crisis.

It is inevitable that the current status quo will continue into the new year; very low activity, a huge oversupply of properties for rent and some seriously troubled Estate Agents.

It’s a great time for investors with deep pockets to bulk buy and hold for medium to long term.

Prime London property sales and rentals update summer 2008

Most selling agents are loath to admit that prices are coming down. Many will tell you; the market is flat; there is very little activity; lower asking prices and a host of other carefully chosen words but it is generally agreed that asking prices are down by 15% and are likely to go down a further 5% over the next 12 months.

As we have mentioned before another way of looking at this is that prices only went up 20% last year rather than the 30-40% increase that many prime London locations experienced.

The selling price reductions are at the lower end of the prime London market which is below £5m the rest is flat and the over £10m market, has not been affected.

There are certainly less buyers but there is still demand from highly qualified buyers. These buyers have a good knowledge of the market and know when a special property comes their way they have to pay what it takes to secure it.

In most cases these buyers are acquiring homes that they will hold on to for many years so even if they end up over paying in 10 or 15 years time it will not matter. It is very possible that the top end of the market will still see a slight increase over the next 12 months. Demand is less frantic but prices are holding out.

Sellers are cautious not to be overly confident and as such are willing to agree deals at slightly less favourable conditions. They know that a bird in hand is better than two in the bush.

Growing numbers of property investors and developers are choosing to hold on to their properties and rent whilst riding out the weak market conditions.

This has resulted in better quality properties coming onto the rental market demanding strong rents.

Tenants have become demanding and only want the newest and the best properties. Many traditional and older rental properties are not shifting and in some cases not even at huge discounts.

Traditionally this time of year is always quiet but once the kids are back at school and everyone is back at work we think that mid September will be a telling time

Prime London Property, the waiting game.

Activity has certainly slowed down in prime central London over the last 3 months.

Buyers are cautious and finance is expensive.

One of the largest London agents was quoted as saying: "I could get the best house on the market and will struggle to get 2 viewings in a week."

Its the waiting game; buyers have suffered through the last frenzy and, now , not only will they not pay top money they feel that waiting will only work in their favour. Its fair to say that asking prices are 10% down, the question is will they go down another 10% by autumn?

This is not to say that deals are not happening, they are. Fewer but the values are larger.

Recent press article reported that an owner of a Kensington Palace Gardens property refused £170m. Another prime and uniue property of 4000 sq feet came on the market in Knightsbridge for £25m, a sale was agreed at asking price and the buyer was gazumped when another purchaser offered a same day exchange paying in the region of £3m in excess of the asking price. This is all in a softening market place!

There is also talk of the non domociles moving away from the UK over the next 18 to 24 months , this should result in more prime properties coming on the market and with the increase supply privces will have to be competative.

The point is if you are a seller the chances are you have done well. Specially if you bought your property more than 2 years ago. There may not be 40-50% gains to be had but the gains are still enough to make a seller happy and keep London property investment a viable proposition.

The question is how long will the blues last? Will all purchasers get tired of playing the waiting game at the same time and cause another buying frenzy in Autumn? Will the summer bring oil rich buyers back into town keeping the prices up? Or will we all be suprised by increased investment by the newly rich coming from an emerging market on another continet?

What keeps us all interested in this facinating market place is that things can change so fast that no one can predict what will happen in 6 months time.

Newspapers all say its doom and gloom and prices are dropping and will continue to drop, judging by history and how wrong press reports have been about prime London property, one cant believe what one reads!

London Property 2008 first quarter. Are prices going to crash?

The first quarter of 2008 has seen the much talked about slow down in the London Property Market.



There is an obvious loss of confidence amongst buyers, and finally , sellers and their agents too.



This lack of confidence will result in better pricing and even a drop in the lower priced properties. In the case of prime London Property lower priced means below £5m!



Any price dips, however, must be put in perspective. New pricing should be looked at as more of a correction rather than a drop. 2007 saw an average of 30% increase in prices of prime London Property.



This unrealistic price increase will easily cover any perceived losses that the next 24 months may bring. The end result will be that London property is still a good investment.



Many buyers are holding back to see what will happen over the next six months. The highly qualified buyers, however, those who have spent many months even years chasing after prime property, are still actively looking and are willing to make the financial commitment.



Needless to say any one who is in negotiations to buy a property right now is driving a hard bargain. No one is willing to pay the inflated prices we saw in 2007.



Buyers are exercising extreme caution which is mainly driven by the fact that borrowing is harder and more expensive.



We hope to see more prime properties come onto the sales market as absentee non domicile residents put their London bases up for sale. This follows the exaggerated hype in the press about the effects of the change in non domicile tax status.



Those non domiciles actually resident and based in the UK are electing to pay the £30,000 and make no changes to their property ownership or living arrangements.



Also for consideration is the impact the new non domicile tax will have on employers hiring in London.



The property rental market is driven by the expatriates and their City jobs. Once the Easter school holidays are behind us and the traditional high season starts for big corporate moves we should have a clearer picture of the state of the rental market.



Traditionally as activity in the sales market slows down the demand for housing turns to renting. There is every reason that rentals will continue to be strong and rising since much of the available stock was sold by investors taking advantage of the 2007 property boom.