Bottoms up?

Wednesday, September 09, 2009

There is no doubt that the market ‘bottomed-out' during the final months of 2008 and although property supply remained scarce, an upward trend in new buyer registrations was recorded from the very beginning of 2009.

The level of buyer demand increased significantly from the beginning of Quarter 2 and has continued through the spring and, perhaps surprisingly, the summer months.

This has led to a very quick correction in property selling prices, which have increased by 10-15% over the past six months, recouping almost half of the fall in selling prices seen between mid 2007 and the end of 2008.

In June 2009 we saw a marked improvement in new instructions coming to the market, which has continued through the summer months, and created a more healthy balance between supply and demand. We believe this will now stabilise prices for the remainder of the year, while maintaining a similar level of sales transactions as achieved between April and August.

Putting this into perspective, sales agreed during the current quarter are over double that for the same period last year, but still 20% less than 2007.

The general economy, unemployment, and the relatively still difficult mortgage market, particularly for the first time buyers, is undoubtedly still suppressing and maintaining an air of caution in the market place.

However, we believe this is being compensated by the substantial pent-up demand of both buyers and sellers that has built up over the past two years, who are now gaining confidence and drip feeding, presently on a gradual and measured basis, into the market.

This is positive news for the sales market in London and there is no reason why this trend should not continue.

However, if lenders start competing for business again by easing and extending lending criteria to the unsustainable levels seen in 2005 to 2007, then this recovery in the property market could come to an abrupt halt.

Hopefully the Government will control and prevent such circumstances arising and, subject to this, we anticipate a very positive and continuing healthy market for the rest of the years and through 2010.

We hope so - we're expanding.

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