Stock levels improving?
Looking back over 2011, constrained stock levels characterised the prime London sales market, leaving many potential buyers frustrated by the lack of suitable properties available in their areas of choice.
In our January survey only 19.5% of agents surveyed had seen an increase in new instructions in the last three months of 2011, compared with 49% reporting a fall. However, the latest survey results suggest more properties are reaching the market, with 35% of respondents reporting a rise in new instructions so far this year.
Central London still appreciating but will the Budget hamper growth?
Strong demand for homes in prime London continued into the first quarter of the year, with prices increasing by 1.8%.
The market over £2 million remained buoyant in the first three months of the year, with prices rising by 2.1%. It remains to be seen whether the new stamp duty threshold introduced in the 2012 budget will temper demand and price growth at the top end over the course of the year.
Within Prime Central London there are different sub-markets. The market under £2 million has a higher proportion of domestic buyers, with houses commanding higher prices per square foot than flats. So far this year, houses have maintained an average premium of 24.6% over flats (an additional £231 per square foot).
The market above £2 million is quite different with average prices paid per square foot considerably higher.
At the top end of the market, where non-domestic buyers dominate, flats remain the most sought after. Overseas buyers are continuing to shun the traditional London townhouse in favour of lateral living spaces, parking and security. At over £2 million, it is flats which command a £ per square foot premium, averaging 20% over houses.
Cash still king
Cash buyers are still a prolific driving force of the prime London market, accounting for 58% of purchases amongst our survey respondents in the first three months of 2012. Those buying with less than 50% cash accounted for just 26% of total sales so far this year.
Bonus money has, as expected, failed to filter into the prime London market this year. Only 7% of respondents thought bonus buyers had increased compared with 2011, with 52% seeing less bonus money coming into property than in the same period last year.
Overseas demand remains strong
77% of survey respondents viewed the ongoing difficulties within the Eurozone as a draw for overseas investors. Of those agents surveyed, only 9% had seen the number of overseas applicants fall in the last three months, compared with 39% who had seen an increase.
Outlook for 2012
The outlook for prices over 2012 remains positive, with 68% of those surveyed expecting prices to rise in 2012. However, transaction levels were expected to remain subdued this year, with only 32% of respondents forecasting an increase in total transactions in 2012.
