View from the top
Mon 30 Jun 2014
Word speaks of a plateau in Prime London prices and stable supply and demand levels: Weve reached the top of the market announced one high-end estate agent this month. The supply of property in London has risen by 26% since March, says Marsh & Parsons, while the number of registered buyers per property has dropped from 24 in January to 16 on the cusp of June. Q2s price growth in Prime Central London was a touch over half that of Q1, dropping from a quite dramatic 4% to a more reasonable 2.1% over the last three months, according to Marsh & Parsons. Whats more, theres been very little change in property prices, as growth stalls over the last few weeks. The agency is the latest in a rather influential line-up of pundits and companies that are talking about this being the top of the prime market cycle. Douglas & Gordons Ed Mead argued that buyers have reached the limit of their elasticity while Knight Frank and Markits latest House Price Sentiment Index reports a distinct cooling in home-owners price growth expectations. Private bank Coutts stated that house prices are fully valued at the top-end of the London market, and two property giant, Development Securities and Grosvenor, are moving away from prime property investments over concerns about values (financial, not ethical). Both Savills and Knight Frank have also reported localised plateaus in PCL price rises. We believe this slowdown in price growth is a healthy and organic development, says Peter Rollings, CEO of Marsh & Parsons, and would urge the government and the Bank of England to allow the market to take its natural course. Ramping up interest rates or making mortgages more expensive would be a gross overreaction, which could harm the wider market outside of the capital, where the story is very different and recovery is only beginning to take shape. There are, of course, still plenty the majority of reports that focus more on continued price rises, transaction level peaks and bubble-mania. Rightmove, for example just reported the biggest ever May rise for asking prices, at 3.6%; Hamptons reported a chunky 18% annual growth in Fulham; and Beauchamp Estates is fully expecting someplace in Knightsbridge to breach 10,000 per square foot very soon.