The average property in Prime Central London is now worth more than £2 million, according to a leading estate agent’s report published this month.
The value of property in central hot spots, including areas such as Chelsea and Kensington, has risen by 9.3 per cent in the past year and by 3.4 per cent in the last quarter. Increased demand at a time of an acute shortage of stock is pushing prices higher. During the last quarter, 11 per cent more buyers entered the market in competition for 14 per cent fewer properties.
While transactions across Prime London as a whole increased by 40 per cent during the last quarter, the volume of transactions in central areas reduced by 38 per cent. Analysts recognise that while the imbalance of supply and demand is pushing property prices higher in Prime London areas, it’s also creating an excellent time to sell property. Helped by the rapidly improving availability of mortgages, buyers are queuing up for the chance to buy a Prime London home.
There is evidence that property is changing hands in record time and for close to the asking price, with 98 per cent of the asking price for Prime London property regularly being achieved.
Despite the introduction of the 7 per cent stamp duty tax, the number of properties worth £2 million or more has continued to increase. Over a third (38 per cent) of Prime Central London properties are now worth £2 million – and in Prime London as a whole, almost a quarter (24.6 per cent) of homes fall into this category.
The price increases are particularly pronounced in properties which were worth more than £3 million in January 2010. At the beginning of 2010, the average price of a property in this category was £4,509,739. The average current price for properties in this category is now £5,481,884 – an increase of 20 per cent in just 3.5 years.
Hosting the 2012 Olympics has been a huge commercial success – worth around £10billion – for London and the South East, according to figures out this week, and the effect has helped to fuel growth in the city’s property market.
This year, even more sporting success is helping to drive a feel good factor across the UK, according to a leading national estate agency, which said that the British and Irish Lions in Australia and Andy Murray’s victory at Wimbledon, combined with the sunshine, have had a positive effect on the housing market.
England’s first match win in the Ashes will only add to this.
The fact that most homes look more appealing in the sunlight and that house hunting when the weather’s fine is a more pleasurable experience means those wishing to sell should keep one eye on the long-term weather forecasts, added the agency.
The market boosting weather is also backed up by the stats. Demand from would-be homebuyers picked up at its fastest rate in nearly four years in June, according to the survey of sentiment from the Royal Institution of Chartered Surveyors.
However times of sporting success and high morale in the UK aren’t always coupled with good performance in the housing market. Last year, during the Olympic success, the housing market slowed down due to people staying in being glued to their TVs.
Reflecting a more positive mood, a net balance of 45 per cent of surveyors expect home sales to rise over the coming three months, up from 36 per cent in May and the highest reading since the survey began more than a decade ago.
Sealed bids have returned to the buoyant London property market, reports a leading property firm, driven by fierce competition in the face of a severe shortage of homes for sale.
As buyers fight for limited stock across London, sealed bids are becoming the norm, especially for one-bedroom apartments in zone one and family homes in the sought-after locations of Clapham and Islington.
Property consultancy Cluttons is seeing multiple offers being made, ending in sealed bids, with the vendor often achieving in excess of the full asking price. Generic one-bedroom properties around the £550,000 price being bought as pieds-á-terre, first-time buyer homes or as investments are seeing a flurry of buyers eager to secure a purchase. A family home close to a good school in Clapham, recently witnessed 68 viewings with a sealed bid date set at the onset of marketing, resulting in 20 bids being received.
James Hyman at Cluttons, said: “The sealed bids process is the fairest way letting buyers dictate what they are prepared to pay for a property, as low stock volumes and the recent rise in renovations and extensions means each home needs to be considered on its own merit. Domestic and foreign buyers in prime Central London are not being put off by high prices and have been encouraged by the performance of the market, which has suffered little impact from the wider economic slowdown.”
Buyers of properties under £2 million are no longer limiting their searches to one area of London, added Cluttons. Instead, they are setting their sights more widely to meet their aspirations and tick more boxes by looking for value both north and south of the river, in secondary locations. Buyers traditionally focused on Islington in the north are looking to Stoke Newington and Hoxton, while in the south they are widening their search to Fulham and Clapham. Increasingly, buyers in SE1/Shad Thames are willing to migrate to Wapping, north of the river, where prices are on average 30 per cent cheaper.
House prices in the UK are rising at the fastest rate for more than three years, after June recorded 0.5 per cent growth, marking the fifth consecutive month of rises.
House prices in the second quarter of 2013 (April-June) were 2.1 per cent higher than in the first quarter of the year (January-March), according to the latest Halifax House Price Index. As a result, house price growth between the latest three months and the preceding three months edged above the 1-2 per cent range that it had been in throughout the preceding five months. This was the biggest increase on this measure since January 2010 (2.9 per cent).
Martin Ellis, housing economist at Halifax said: “Activity has also improved in recent months. Both home sales and mortgage approvals for house purchase – a leading indicator of sales – increased in May. Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices. The Funding for Lending Scheme is also likely to be boosting the market by helping to reduce mortgage rates. There are also early indications that the Help to Buy: equity loan scheme may be stimulating demand. Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013.”
Meanwhile, the number of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by seven per cent between April and May to 58,200; the highest monthly level since December 2009. Approvals in the three months to May were two per cent higher than in the previous three months.