Residential market recovery led by prime suburbs

Supply of new property is down by 40% year-on-year and the stock of new properties in the pipeline and coming to the market over the next two months is down 42% year on year.

On the demand side, new purchasers are up by 33% y-o-y and viewing volumes are also up by 23% over the same period.

Sales volumes have risen by 38% y-o-y (although they are still 29% below the level they were at in June 2009).

The improved market has had a marginally positive impact on the time taken to sell a property – which fell from 70 days to 63 days between March and June

Asking to achieved price ratios have improved slightly – but still remain well below their level a year ago. In June the average ratio was 89% compared to 94% a year earlier.

Knight Frank said its research revealed that it was the so called "prime suburbs" – where demand was picking up more strongly than the more affordable areas of the capital.

Liam Bailey, head of residential research, Knight Frank, said: "We saw last year that the markets which were hit by the biggest price falls were the prime markets – the markets which traditionally appealed to bankers and City employees. When the economy in London began to contract, it was areas like Fulham and Wandsworth which initially took the hit in prices.

"In the last few months the market reaction has been that this discounting was overdone, and in fact far from the City economy being down and out – the view is that the central London economy will be one of the first parts of Europe to see a sustained recovery.

"Residential markets where central London’s high-earners want to live are the first to see recovery in pricing, demand and supply."

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