2009 has been a particularly difficult year for Central London property. The market bottomed out in February/March and during these months the few transactions that happened where at the lowest levels. However, the market began to pick up as we moved into the spring months largely due to overseas investors buying up London property. In some cases the combination of the weak pound and lower capital values created savings for buyers of between 40% and 50% on what an identical property would have cost 12 months ago.

At the same time we also experienced a surge of “upsizers” keen to exploit lower prices. This sector of the market decided it was time to sell their apartment £1,000,000 for 10% or 15% less but to save 10% or 15% on a much more expensive £2,500,000 house, leaving them with a net gain.

As we moved through the summer it was apparent that stock levels were gradually being depleted with not much sign of more stock coming on. Would be sellers held off from putting their own properties on the market due to them being unable to find a suitable property to move to. Sellers of second homes or investment properties (a big source of property supply in W1 and W2) have been reticent to sell due to interest rates being at an all time low and a lack of any meaningful alternative to do with the sales proceeds.

This dwindling pool of stock combined with pent up demand resulted in the return of gazumping and sealed bids situations with examples of some properties selling at hundreds of thousands of pounds over and above their asking prices. This phenomenon, however, was restricted to the very best homes in the very best locations.

As we move into 2010 the market is likely to remain buoyant. With interest rate increases still a possibility and with mortgage with lending likely to ease further, it is probable that buyers will have both a greater choice of properties and more purchasing power. This combination, however, is most likely to mean that prices will remain stable for the next 12 to 18 months with modest increases after that.

This entry was posted on Monday, November 23rd, 2009 at 3:30 pm and is filed under Market Comment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.