It is not uncommon for the property market to go into a lull over the summer months as would-be buyers take holidays which can, in turn, lead sellers to reduce prices.
However, of potentially greater significance is that Prime prices in September are 1.5% lower when compared to the same month in September 2009. On an annual basis, Prime Platinum properties continue to stand firm, increasing by 0.4% between September 2009 and September 2010.
Stock availability in the Prime and Prime Platinum segments tailed off in September. Stock had grown by at least 6% a month for the previous four months in both tiers but slowed to just 0.6% in September. The amount of new stock coming onto the market traditionally declined in the last few months of the year with many people having one eye on the dreaded Christmas move but renewed fears of a double dip recession and the reports of falling house prices could be playing their part and exaggerating this trend.
There are still plenty of quality properties on the market to choose from at both the Prime and Prime Platinum level but the recent surge in new stock coming onto the market seems to be over and we would expect stock levels to remain fairly static for the last quarter of this year.
Asking prices for Prime and Prime Platinum properties continued to fall across London in September.
South West London witnessed the biggest decreases, with Prime properties down 6.9% to £972,579 and 9.1% lower at £1,610,952 in the Prime Platinum tier since August. Annually, asking prices in South West London have fallen 17.0% and 13.6% since September 2009.
South East London was more resilient with asking prices falling by just 1.2% since August at a Prime level and 1.7% in the Prime Platinum tier.
On an annual basis, two areas of London are commanding higher prices in September this year than in September 2009. The average asking price for Prime property in Central London is 6.0% higher at £2,282,688 and 2.1% higher in North West London at £1,495,370.
Prime Platinum properties in both areas have increased by even more over the last 12 months, by 9.8% and 9.9% respectively.
The availability of new stock in many parts of London slowed in September. Across the capital as a whole, Prime and Prime Platinum stock levels fell by over 2% from August, compared to an increase in stock levels of between 0.6% and 0.7% nationwide. The boroughs of Kensington and Chelsea (8.5%) and Wandsworth (6.9%) saw the biggest drop in stock levels.
The decline both in asking prices and in stock levels in parts of South West London indicates that properties at the top end are being taken off the market. This could in part be a reaction to softening demand from purchasers but it is also likely to be a result of homeowners removing their properties from the market in the face of increased market uncertainty and concerns over a ‘double dip’.
While prices for prime properties in London have fallen for the second consecutive month, a continuing decrease in stock levels would quickly redress this as demand for premium properties in London remains high.
However James Wyatt FRICS of John D Wood & Co is reporting new highs reached in Prime Central London property:
“Real interest rates being negative have had a very positive effect on property prices in Prime Central London over the last year, as shown by a 32% increase in the John D Wood & Co. index, up a net 10% in the third quarter.
International buyers with cash and the resurgence of the London stock market with City bonuses being paid has resulted in incredibly strong demand. With a lack of suitable property available many property sellers, who are sitting on increased equity, are able to hold out for the highest price. This combination has led to flats in Prime Central London achieving new highs, albeit houses have come back a little.”
John D Wood & Co. uses data at the time of exchange of contracts from all leading agents. Many of the properties used in the last quarter have not yet completed, which means the indices lead the Land Registry data. The data is independently compiled by Dr Gibbons of the London School of Economics using methodology developed in conjunction with Professor Muellbauer (Nuffield College, Oxford).
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