Prime London properties see prices fall


Prices of prime London residential properties fell 3.7% in January, the second highest monthly fall on record, according to the latest report by leading estate agents Knight Frank.


[UKPRwire, Tue Feb 10 2009] Prices of prime London residential properties fell 3.7% in January, the second highest monthly fall on record, according to the latest report by leading estate agents Knight Frank. The brings the overall decline since the March 2008 peak down by 21.4%, with the £1 million-to-£2.5 million sector falling 25.3%. Knight Frank has revised its already gloomy forecast downwards for peak-to-trough pricing in prime central London from 30% to at least 35%.

After showing resilience up to last August, the superprime £10 million sector is catching up with price declines, losing a dramatic 20% of their value in the five months to September.

According to a report published on February 2nd by the centre for economics and business research (cebr), 2009 could see the largest single year fall in UK property prices if lending conditions stay the same.

The huge decrease in the availability of mortgage financing is a primary factor in the unprecedented decline, with buyers only being able to take advantage of the low interest rates if they have a sizable deposit, and businesses struggling to keep afloat with the severe restriction of credit.

However there are signs that buyer activity is starting to increase, both from domestic and international buyers, with a substantial rise in viewing levels of almost 65% in January 2009 compared to January 2008. The level of interest by foreign purchasers showed a year-on-year increase in January of 35% – mainly Middle East buyers (52%), followed by European buyers (38%, with Norway, France and Italy particularly strong).

London’s premium property core of Mayfair, Belgravia, Chelsea and Knightsbridge is leading the increase in viewing and applicant activity, with an increase in viewings of more than 80% on a year-on-year basis. However the interest has not yet translated into sales, which overall continue to worsen. Looking ahead, Liam Bailey, head of residential research at Knight Frank, said, “We expect transactions to increase very gradually throughout the year in prime markets, and as a result price falls should begin to level out towards the end of 2009, although 2010 is likely to see prices move sideways at best.”

The weakness of sterling, if it continues, will help to further demand from abroad, which would compensate in part for the drop in purchasing power of many City-based buyers. “While the Capital might seem increasingly attractive to domestic buyers,” said Mr. Bailey, “the opportunities available look even better value from overseas as a result of the dramatic decline in the value of the pound.”



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