Market Comment

A lot has been happening in the London property market since I last recorded a video blog. The election, an emergency budget, increase in capital gains tax and the abolition of HIPs have all contributed to shaping the market over the last few months, and following 15 months of growth, the market seems to be 'pausing for breath'. As we are currently in the middle of what is traditionally the quieter summer period, I think that it won’t be until early September that we will  begin to see where the market is headed for the remainder of the year. As always, I would love to hear your thoughts on how you see the London property market – please feel free to comment on my video blog below. Watch video.

Luxury rentals are seeing a boom in Central London despite the uncertainty and challenges faced by the economy. Over the past two months, the volume of properties being let at rents over £1,000 per week has risen by 53% on the same period last year. The summer months, being the time of year when most families relocating to London will choose to move, are traditionally always the prime market for high-end rental properties, however, this year has seen a notable increase in not only the volume of prospective tenants registering to rent at the top end, but also the budgets they are looking to spend on their accommodation. Indeed we have seen an increase of 17% in the average budget at the top end of the market (£1,000 per week and above) compared to this time last year.

No sooner had we learned the result of the election, we were informed of an 'emergency' budget, meaning a further two months of putting the property market 'on hold' and allowing markets to drift. Well, now we know what is going to happen and whilst it's not going to be pretty (I simply can't believe anyone was expecting it to be so) it’s perhaps not as bad as it could’ve been and in my view has left just enough 'meat on the bone' to allow property owners and investors alike to enter the market with a medium to long term strategy.

Homeowners buying into the market are in pretty much the same position as before - historically low interest rates, tight but loosening money supply, and with perhaps a little more to choose from in London (but still less than the long term average). First time buyers don't pay stamp duty on purchases below £250,000 and as of next April, the level of stamp duty will rise to 5% for purchases over £1 million. Painful, but not so painful that it will push those buyers out of the market - most are buying a home after all.

The Home Information Pack. Born 1 August 2007; died 20 May 2010 - aged 2 years 9 months

After a difficult birth – Labour took 9 years – the Home Information Pack came into being, delivered by housing minister Ruth Kelly, in August 2007. But this Frankenstein’s Policy of oddly bolted-together components, which aimed to speed up the home-buying process, was stunted by a denial of key elements, precipitating its ultimate demise.

The Home Information Pack was a glint in the Labour Party’s eye in the 1997 election manifesto, where it was seen as a solution to the problem of gazumping.

But it remained uncertain that the Home Information Pack would ever be born and it was not until November 2004, after almost two parliaments of trying, that the Housing Bill came into effect and the HIP was conceived. Even at this stage, with Labour expecting, the HIP was not due for a further three years.

With so many things affecting the current property market at the moment, it seemed like the perfect time to publish my next video blog. In summary, the traditional 'Easter slow down' helped to keep the dramatic house price rises under some control and likewise, there is always an element of uncertainty when a general election looms - however, buyers are still plentiful and eager to invest their money in a real and tangible asset, where medium and long term capital appreciation is almost certain. Looking forward, my biggest concern is for a 'hung parliament' result - to find out why, and for more details about the London property market, watch my blog here.