Market Report Update
Friday, November 18, 2011 by Douglas And Gordon
There has been no let-up in the volatility of financial markets since our Market Report written last month (click here to see “Market Report - September 2011”). There is still no evidence that the Euro crisis and the threat of a global financial meltdown is having a negative impact on the Central London sales market. In fact, demand for property (click here to see The London Barometer October 2011), is actually significantly up in the form of applicant registrations compared with 2010 whilst supply is marginally down, year on year. Because of this, we would expect in our 2011 review to be reporting yet further increase in prices in the last quarter. In the more seasonal lettings market, demand is falling in the last months of the year but remains higher than it was a year ago and as with the sales market, supply is below where it was in October 2010. Transaction numbers are down with tenants tending to stay put but facing a minimum of a 5% increase on renewal.
Why are prices holding up and why is there such a shortage of property in Central London? Are prices being pushed up by demand from the first time buyer sector or pulled up by demand from the very top? The evidence suggests the latter with first time buyers, often with parental help, having to find, at a minimum, 25%-30% deposits. The centre of the city and its periphery are benefitting from what has been dubbed the “champagne cascade effect” with values at the summit being pulled up by global demand (click here to see “The Global Wealth Effect”).
Michael Hodgson - Chairman