The central London housing market is set to maintain current high activity levels throughout the summer, rather than follow the traditional pattern of a quiet July and August, according to property consultancy Cluttons.
In its London View: Summer 2011 report it says that strong demand has driven average central London house values over £1.6 million for the first time since the third quarter of 2008. Buyer demand remains close to record highs, while stock levels are currently over 50% lower than the same period in 2010.
This strong demand looks set to fuel the market over the summer, traditionally a very quiet period for the housing market, with buyers continuing their search over the holidays in fear of missing out on a suitable property, it adds.
The late Easter holiday this year has also meant that many house hunters who only returned from Easter breaks in May have delayed their summer holiday until the latter part of August, and will continue to house hunt through the summer.
‘There is so much pent up demand in the market that competition for good property is as fierce as ever. Buyers are telling us they are wary of postponing their search over the holidays in case they miss out and will instead continue to actively look throughout July and most of August,’ said James Hyman, partner for residential sales.
‘Domestic buyers also face growing competition from Middle Eastern buyers who have overcome complications in liquidising their assets since the unrest in the Middle East began, and are now actively securing their funds in the Central London property market,’ he added.
Meanwhile, the latest research from the Worldwide Property Group confidence tracker survey carried out in May, reveals a 20% drop in respondents expecting interest rates to rise, a figure which has previously trended upwards in the monthly survey since the start of the year.
Even more significant was the result that, of those respondents who believe rates could rise, nearly 70% thought this would only be a moderate rise by a maximum of 0.5%. By comparison, at the start of the year, 40% of respondents believed an increase could be anything from 0.75% to 3% or more.
Other results from the survey revealed that only 16% of respondents believe that house prices will fall over the next 12 months, the lowest figure since the survey began. This could indicate that the public are of the impression that prices have levelled off and thus explains why 70% of respondents believe property is the best investment, with the same number of the opinion that now is a good time to invest in UK property.
Of the 58% of respondents who said they would consider making a foreign property investment, many appear to be focusing their attention on the America’s, with the USA holding number one spot, followed by the Caribbean and Brazil.
‘By maintaining the base rate at 0.5% in May, the month that many had marked as the changing point, the Bank of England has offered renewed confidence to those expecting a rise and highlighted that the fragile state of the economy makes this an unlikely event for some time to come,’ said Kevin Wilkes, the managing director of the Worldwide Property Group.
’Whilst homeowners continue to the reap the benefits, savers are undoubtedly suffering and are being forced to consider alternatives such as property in order to see a long term return on their investment. I am not surprised the US is popular for those looking to make a foreign investment. The decline in US house prices has been as high as 60% in some areas since the market peaked in June 2006. It is hard to see how the market can drop much further,’ he added.