Prime London Property & the credit crunch 2009

Any properties that are on the open market for sale right now are those of distressed sellers or belong to people who have no intention of selling. The number of new sales properties coming to the market per day is 80% lower than this time last year.



In 2007 & 2008 prices rose by 30% this increase will be corrected in 2009. Any buyers who bought in 2007-2008, during the peak, are set to lose money unless they can afford to hold on to their properties for a long while.



In most prime areas there has already been a 20% correction in prices. This correction is for properties less than £10m.



Spring of 2009 should see a return of transactions. During the last quarter of 2008 most agents agreed that nothing was happening there were no deals to be done.



This was a result of no funding being available and buyers waiting for sellers to drop their prices. Many sellers have chosen to hold on for better times and in the meantime are turning to the rental market. Owners with tracker mortgages are also experiencing improved cash flows since interest rates are so low.



Depressed market conditions, strong Euro and Dollar are contributing towards an increase in demand from cash buyers and particularly investors looking to buy blocks of flats and distressed sales. However it is still hard to secure properties in super prime areas at a bargain price.



It is possible that the property market’s reaction to the financial crises is starting to settle. The dramatic decreases in prices have slowed down and rental activity has picked up.



It is predicted that unemployment may reach 18% , in this case this will result in properties belonging to city workers being the hardest hit. This being the case the price range likely to be most affected in 2009 will be £1-£2m (entry level for prime London property).



Once funding is more readily available an increase in activity should follow and if demand gets stronger it may be that we will not reach the 30% decrease in London’s prime areas but halt in the low to mid 20%’s.