Market Report October 2010
Friday, November 05, 2010 by Michael Hodgson
As the frequency of negative reports on the UK housing market gathers pace, the impact on the Central London market is predictable – slowdown. As we predicted in our summer report, this does not necessarily mean price falls.
- - In the last quarter, the average value in the sales market in Central London has increased by 0.5%.
- - In the lettings market, the average rent has increased by 2.9% in the quarter - well on the way to a 5% increase that we predicted between July and the end of 2010.
Historically, when the economic outlook looks fragile – and we write in the wake of the comprehensive spending review – the reaction of vendors and purchasers in Prime Central London is to sit on their hands. This however is a very recent trend, with the position over the summer being one of greater activity than in the corresponding period in 2009. Throughout the summer of 2010, the volume of sales throughout Douglas & Gordon’s area was up 16% and even in September it was 9% up in 2010 versus 2009. However, in the six months to September, the number of applicants registering to buy property was down 14% on the figure in 2009 and in September alone it was down 33% year on year. On the other hand, the stock of property in September was 31% up on 2009. Therefore, as we said in our summer report, the supply / demand relationship is more balanced, resulting in a slow down of growth but not, on average, a fall in prices.
In the lettings market, applicant registrations are up 24% and the stock of property to let is nearly half (52%) of the September 2009 level. As a result, rents went up by nearly 3% in the quarter and have now increased 18% in the last 15 months. Unless the supply increases (and where is it going to come from?), rental values can only go in one direction.