Lack of stock is bolstering the real estate market in London with multiple buyers chasing every property available for sale, according to a new report.
And despite speculation that house prices would fall in 2011 it has been a positive start to the year for the London sales market with D&G reporting the highest number of applicants it has seen in over a year and three times more than in December.
Its London Property Barometer for January shows that although it is not uncommon to see an increase in both buyers and sellers in January, it appears that many of those buyers are now genuinely ready to enter the market having realised that mortgage rates are on the way up and therefore having booked their rates they now need to spend within six months.
‘Lack of stock remains the key issue for the London sales market with our figures showing almost five buyers for every property available for sale. This lack of stock continues to be caused by the inertia of low interest rates and consequent low mortgage rates,’ said Ed Mead, D&G director.
He believes that believes prices may well rise by at least 5% this year which may perhaps give buyers an extra incentive to feel they are buying at the right time.
The London lettings market is seeing similar levels of interest, according to director Virginia Skilbeck. ‘Good quality properties in popular areas are being let at the highest rates seen in the past few years, with some properties being let within hours of coming to the market. The continuing lack of properties for sale has caused many buyers to remain in rented accommodation, increasing the number of renewals,’ she said.
‘With the rental market continuing to strengthen over 2010, buy to let investors have returned to the market and we have had enquiries from both sophisticated and amateur investors this year,’ she added.
A separate report from Knight Frank shows that prime central London prices increased by 1.1% in January, led by Knightsbridge and Kensington where values are up 6% in three months. Prices are now 26.9% higher than March 2009 and 3.4% lower than their all time peak reached in March 2008.
‘London has bucked the wider UK trend in recent months, with strong price growth and resilient demand for property. Whereas prices in the wider UK market fell by over 1% in the year to January, central London saw continued double digit growth,’ said Liam Bailey, head of residential research at Knight Frank.
‘Demand for property has been strong, applicant volumes were 13% higher in the three months to January compared to the same period a year earlier. The real drivers of this demand have been overseas buyers, especially Europeans, and also City based buyers, who have been more numerous than expected given the uncertain discussions over bonus levels,’ he added.