Liquid error: wrong number of arguments (2 for 1) Your Money: Activity hots up among London homeowners | Marsh & Parsons Sales and Lettings Estate Agents London

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Your Money: Activity hots up among London homeowners

Thu 31 Jan 2013

Activity hots up among London homeowners

More and more existing domestic homeowners in prime areas of the capital are moving home.

According to estate agents Marsh & Parsons, domestic homeowners moving up the London property ladder to bigger homes accounted for 19.3% of all moves in the last quarter of 2012, the highest level since the first quarter of 2011 and a rise from 14.5% in Q3 2012.

Those trading up are taking advantage of capital gains 11.2% in the last year and a favourable mortgage market for those with equity. Likewise downsizers moving to smaller properties, cashing in after strong capital appreciation, made up 6.6% of the sales market, compared to 4.9% a year ago, and 3.6% in Q4 2010.

However, first-time buyers continue to find it hard to get on the London property ladder thanks to tight borrowing criteria and high deposit requirements, with the proportion of purchases in the prime areas of London that are made by first-time buyers dropping by 3% between Q4 2011 and Q4 2012.

International buyers still account for a significant proportion of housing market activity in prime central London. In 2012, 52% of purchases in Chelsea were made by international buyers, followed by 47% in Kensington and 46% in Notting Hill.

However, as they move up and down the ladder, domestic buyers are rapidly growing in prominence. In the fourth quarter of 2012, 73% of purchases in prime London were made by domestic buyers, driven by the activity of UK nationals outside Kensington and Chelsea. This compares with 71% of purchases in the previous quarter and 67% at 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% of all buyers in the area being UK nationals while Clapham saw 86%.

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.

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