The property market in London is particularly active with international buyers and although prices are dipping slightly the outlook is strong, according to experts.
Andrew Giller, partner and head of The Buying Solution’s London office, says that buyers from Greece, New Zealand, India and Turkey with budgets from £10 million to £100 million plus are looking to purchase in the traditional prime areas of Mayfair, Knightsbridge, Belgravia, Kensington and Chelsea.
In addition, the family homes market is the strongest it has been for a number of years with an increasing number of UK based clients wanting to purchase family homes in the £5 million to £15 million price range, particularly in the core areas of Kensington and Chelsea.
‘We’re also seeing a strong demand from investment purchasers in the £1 million to £3 million price range, including people buying for children, as well as city buyers who want to purchase before bonus monies are paid out when they face more competition in the market place.
He is predicting an active early spring market as the signs are that confidence is returning to the City and money is being made, and there may be a rush to purchase before the stamp duty increase to 5% on properties above £1 million which comes into force in April 2011.
‘It is also likely that interest rates will rise, so buyers will want to lock into a competitive mortgage sooner rather than later. This could push prices up if supply and demand are imbalanced,’ he explained.
Although the latest index from consultants Knight Frank shows that prime central London prices fell by 0.23% in October it points out that the annual growth rates is 12%. Property in London will continue to outperform the rest of the UK in 2011 because of higher value business activity and demand from foreign buyers, according to Cluttons.
Prices are predicted to fall in the first half of 2011, to stabilise in the second half and then growth returning in 2012 of around 4% followed by 5% in 2013, its latest report says.
‘We forecast UK house prices at the end of 2010 to be up 2.6%, but this reflects strong growth in the first six months and further price declines in the fourth quarter. Continued diminutive quarterly falls in the first half of 2011 are expected, stabilising in the latter half of the year, delivering a small overall decline in prices of 0.1%,’ said Andrew Stanford, head of Cluttons’ residential consultancy division.
‘Looking further ahead we expect strength to return to the market with an increase of nearly 4% in 2012 and then 5% in 2013 and 2014 respectively, on the back of an improved economic environment and greater household confidence as the spending cuts work their way through the economy and the private sector takes some benefit,’ he added.
The company is forecasting central London price growth of 2.5% in 2011, picking up to 6.6% in 2012. The pattern is similar in Greater London as a whole, although next year the pace of growth will be dented by household uncertainty, resulting in an increase in prices of 1.3%, rebounding to 7.6% in 2012.
‘The disproportionate number of households dependent on the financial services sector, directly or indirectly, has to an extent driven demand in London over the last year. Current demand profile indicates that such buyers remain strong in the market, though this factor should not be overstated,’ explained Stanford.
‘Despite the economic slowdown, London will continue to benefit from its predominance of higher value business activity and its focus for international investment. As a result the capital will fare better than the UK as a whole, both economically and in terms of house price growth. On an annualised basis we expect UK residential values to rise by 3.3% per annum over the next five years, compared with 4.4% per annum in Central London,’ he added.