July and August Market Report
Wednesday, August 11, 2010 by Ivor Dickinson
At Douglas & Gordon we are not seeing the deluge of new property coming to the residential sales market in Central London that is being reported in northern England, (9 August 2010). Neither are we seeing any evidence of falling prices.
July 2010 saw Douglas & Gordon take on almost exactly the same number of new properties as in July 2009. However, the level of stock available is continuing to grow, an increase of 15% more than the figures in June and, rather more worryingly, 68% more than this time last year. The reason for this continuing rise in stock, despite only average levels of new instructions coming on to the sales market is the slow down of actual sales.
In July, Douglas & Gordon agreed 28% fewer sales than in June; however this is perfectly normal for this time of year. Last year was exceptional as we didn’t see a summer slump and the lack of property throughout the year was the reason for a 25% increase in prices.
As this year progresses, we see no cause for concern or indeed why prices should fall. Both supply and demand, although different to last year, are still healthy.
As is often the case, we are seeing in the lettings market the polar opposite to the sales market. Instead of the increase in sales stock of 68%, in lettings we have an extraordinary 80% fewer properties available to let this July compared to last. Likewise, Douglas & Gordon registered 37% more prospective tenants this July. (In sales there were 47% fewer applicants – however as previously stated, last years sales market was very unusual.)
We believe that sales prices in Central London will remain steadfast, despite recent press speculation to the contrary, for a variety of reasons.
Firstly, demand is still healthy, even at this the very quietest time of the year.
Secondly, we have a coalition government which is getting a grip of the financial mess left to us by Messrs Blair and Brown. Although their measures may appear painful, at least there is some certainty as to what the future holds. What a housing market hates more than anything is uncertainty.
Thirdly, we have had a very solid start to the year, even with the banks still reluctant to lend. This situation will only improve as pressure grows on these now profitable institutions to loosen their purse strings.
Lastly the big change in the lettings market will tempt back the buy-to-let investors, creating yet more demand.
So to summarise, vendors will need to be realistic in the second half of this financial year, but there is no reason to suggest that sales prices in Central London should fall – despite press speculation to the contrary.