The Independent: Domestic househunters increasinly important in London property market
Thu 31 Jan 2013
Domestic househunters increasingly important in London property market
A growing proportion of homeowners in the prime areas of London are cashing in on capital gains to trade up or down, according to Marsh & Parsons latest figures. Home buyers upsizing in the prime areas of London accounted for nearly one-fifth of all moves in the last three months of 2012, says the estate agent, making it the highest level since the beginning of 2011 and 17 per cent higher than a year ago. Those trading up are taking advantage of capital gains 11.2 per cent in the last year alone and a favourable mortgage market for those with equity.
Downsizers made up 6.6 per cent of the sales market, compared to 4.9 per cent a year ago.
However, the first-time buyer market is still suffering - the proportion of purchases in the prime areas of London made by first-time buyers dropped by three per cent between the last three months of 2011 and the end of 2012.
International buyers are still keen on the more traditional areas of prime central London. In the last year, 52 per cent of purchases in Chelsea were made by international buyers, followed by 47 per cent in Kensington and 46 per cent in Notting Hill. Earlier this month, a report from Knight Frank showed that international investors spent 2.2 billion on central London new-build property in 2012, the most active overseas buyers being from Singapore, Hong Kong, China, Malaysia and Russia.
Yet at the same time, domestic buyers are rapidly growing in numbers. Between October and December last year, 73 per cent of purchases in prime London were made by domestic buyers, up 6 per cent from the start of the year.
Domestic buyers were in stronger concentrations outside the most expensive and traditionally prestigious central areas. In 2012, Balham proved most popular for domestic buyers with 89 per cent of all buyers in the area being UK nationals. In Clapham the figures was 86 per cent.
Peter Rollings, CEO of Marsh & Parsons, said: "International buyers are a crucial part of the patchwork of Londons prime property market, especially within central areas. But the importance of domestic buyers is often overlooked and it grew as 2012 progressed as they recycled wealth within London. Longer term homeowners have seen their equity soar on the back of substantial price growth in the last few years, and many are taking the opportunity to unlock equity by downsizing, or use their increased financial clout to secure the finance they need to upsize.
"The Funding for Lending Scheme is knocking down rates, and, unsurprisingly, banks are still favouring those with substantial deposits with the best deals. This is playing into the hands of London homeowners who have seen their equity grow and are looking to move."