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A Healthy Summer for the London Property Market
August 24, 2009Article by Ray Withers
The property market traditionally slows in London over the summer holiday season with the notable exception of Middle Eastern buying activity focused principally in Central London. This year however some London real estate agencies have experienced higher levels of activity than seasonally anticipated. The number of properties for sale that have been exchanged has been approximately 2.25 times higher compared to this time last year. The net sales measure (agreed sales less sales failing to reach exchange) is widely regarded in the industry as the prime indicator of market confidence.
The current picture could not represent a stronger contrast between the contracting market last summer in 2008 and the increasingly optimistic mood now has led to far higher levels of buying commitment. Indeed, research conducted by a prestigious London-based real estate agency has found that on average central London real estate agencies are now selling over 80% of the properties they take on and in an increasingly quick time frame. This demand coincides with a shortage of stock pushing prices higher in many areas. In summary, it is now probable that most people with properties for sale could sell relatively quickly and at a price rather better than they may have expected!
With regard to property for rent, demand continued to be strong in July across London; new applicants registered were up 20% on last year. Stock levels remained static although there has been a 20% rise in market appraisals completed which should convert to stock in the coming weeks. Overall, London has seen significant rental decreases over the last six months; however statistics show that asking rents gained ground over the last quarter with a slight increase of 0.3%. Some real estate agencies currently have three times the applicants to available stock across London, though Landlords need to remain realistic when it comes to accepting offers. In many locations it is still difficult to find a middle ground on which Landlords and tenants can agree on terms.
Landlords are also choosing to hold on to their tenants once they are in situ. In July 30% of tenancies renewed with a decrease, the average reduction was 10%. Approximately 68% of tenancies were renewed at the same rent which is an increase on previous months.
Many thanks to Hamptons for their research.
Written by: Christopher Chadd