Good quality properties in desirable buildings or streets are driving strong price growth in the prime Central London real estate sector, according to a new report.
These sought after properties are achieving in excess of the asking price, with a number of instances where properties have gone to sealed bids to cope with buyer activity over the past few months, the report from property consultants Cluttons shows.
High demand from city workers looking to spend their bonus cash, overseas buyers and those who have been waiting for the right property to be put on the market has meant that good quality stock is achieving high prices, the report says.
It also reveals that vendors willing to come to market now are transacting quickly, allowing them to move up in prime Central London areas or downsize away from the capital.
‘The shortage of good quality, sensibly priced stock has meant vendors are achieving sales far in excess of the asking price. Regardless of what is happening in the rest of the market and wider economy, there remain many buyers in prime Central London areas who are willing to pay more for the right property,’ said James Hyman, partner for residential sales at Cluttons.
‘Time is of the essence and now is the perfect time to come to market for buyers and sellers needing to tie up deals quickly at excellent prices,’ he added.
Meanwhile a leading property lettings specialist is predicting that property rents in the UK will rise across the country, as demand remains high because potential homeowners can’t get loans.
Dorian Gonsalves, managing director of Belvoir, is optimistic about the buy to let market in 2011 as the impact of the Government’s Comprehensive Spending Review will continue to impact on the private rental sector throughout the year.
His views are supported by Belvoir’s own monthly rental index figures, which have shown a steady increase of 3 to 5% throughout 2010. The very latest Belvoir figures, from more than 140 offices nationwide, reveals an average rent across the country of £703.
This is comparable with April, May and June 2008 when the rental market was buoyant, but is still slightly down from the heights of September 2008 when average rents reached £711.
Gonsalves says that the reasons for the increase in rents throughout 2010 was the continued national shortage of rental properties, combined with constantly increasing demand from tenants, which put upward pressure on rents.
‘The exceptional economic conditions that we are currently experiencing are predicted to continue for the foreseeable future, and means that families are becoming poorer and may have to move further afield to find employment. Potential homeowners will continue to have difficulties obtaining mortgages and saving for a deposit,’ he said.
‘With an estimated 490,000 public sector job cuts planned, the residential sales market is bracing itself to face another dip. Families on lower incomes will have dramatic benefit reductions, including the end of a council house for life policy,’ he added.
‘I think that all of these factors will result in investment landlords being attracted back to the buy to let market as they see better rental yields combined with lower purchases prices. There will also be the return of the accidental landlord who is unable or unwilling to sell their property and turns to the rental market as a viable alternative,’ explained Gonsalves.
He believes that if at some point during 2011 mortgage lenders decide to put their collective weight behind long term investment landlords then there will be ‘a near perfect environment for the long term property investor’.