Research - The London Property Market

An overview of London's sales market

The dominant theme across the London market remains the constrained supply. Although this is true of all areas to some extent, as the London market has become even more polarised, central London seems to be hardest hit, with the mid to upper price bands the most impacted. This ongoing low supply continues to push up prices, with agents in some areas reporting significant pricing levels being achieved. Across the area as a whole, average sales prices have risen by 5.8% since the end of 2010.

Supply may remain tight, but deals are still being done (boosted in part by the early Spring rush to beat the April 6th rise in stamp duty affecting the £1m+ market). Transaction levels rose throughout 2010 and have continued to rise in the first months of 2011. Around 45% of agents surveyed expect instructions to increase over 2011; and with committed buyers ready to absorb some increase in stock they also expect transaction levels to rise over the year. That said, in the most heavily constrained Central market 29% of agents expect transaction levels to be lower in 2011 than in 2010, compared to just 17% in the South area where supply is more readily available.

The London property market witnessed a relatively strong performance during the first half of 2010 with prices in many prime central locations returning to if not exceeding 2007 peak levels.  Prices stabilised in the second half of the year as supply levels strengthened and demand began to level off.  For the year as a whole, the Marsh & Parsons prime central London index recorded a 4.7% increase in average prices.

Although the property market will face a number of challenges in the year ahead, the central London market is expected to continue to outpace the rest of the UK, with demand from cash buyers and overseas investors remaining strong.  As a result, the pace of inflation is expected to be similar to 2010.

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Overview

The Central London residential market continued to record positive price inflation during the third quarter of 2010 albeit at a slower pace than that seen earlier in the year.  Demand has stabilised in recent months, while supply levels have increased slightly alleviating the shortages observed throughout much of 2009.

The narrowing gap between demand and supply will likely see a further softening in the pace of price inflation during the remainder of the year, while transaction activity is expected to remain relatively stable.

Overview

The Central London residential property market has enjoyed a strong performance during the first half of 2010. A combination of buoyant demand and limited supply particularly in the opening quarter led to strong price inflation in the established housing market with price growth of approximately 4.8% recorded in the first six months alone.

As summer approaches there is emerging evidence of a seasonal slowdown in demand which when coupled with an increase in available stock is resulting in stabilisation in pricing.

As we progress into autumn, the market is forecast to exhibit resilient transaction activity in a more stable pricing environment.

London

• Property Price in Central London up 0.3% in May following growth of 0.7% in April
• The latest results for Sentiment Indicator shows overall level of demand strengthened compared to a year ago
• Election and Budget may be impacting transaction activity

Property prices continued their upward trajectory in May with the latest results from the Marsh & Parsons London Index showing a growth of 0.3% in the month resulting in total capital appreciation in Central London of 4.8% in the year to date.

Within the Marsh & Parsons branch network, the area which has shown the greatest price inflation in the year to date is Fulham, which has recorded a 12.6% capital growth in the five month period, followed by Battersea where growth of 9.5% was recorded.

This overall growth of 0.3% in the month compared to growth of 0.7% in April. The moderate slowdown in the pace of price appreciation during the month of May could reflect some reluctance on the part of purchasers to make decisions while the election was ongoing.