Quarterly comment

"Prime London Central prices continue to decouple from the rest of the country..."

Naomi Heaton, Chief Executive of LCP, comments:

HM Land Registry quarterly sales statistics, the only comprehensive dataset on the market have just been released. These show a continued dislocation between the domestic UK market and the international investment centre of prime London Central.

Quarter 2 2011 saw property prices in England and Wales fall 2.8% vs Q1, reducing the average price to £228,095, 1.1% lower than the same point in 2010. In contrast, the average price of flats and maisonettes in London Central increased by 0.25% which represents a rise of almost £85,000 in just one year. Average prices now stand at £8334,225 almost four times that of England and Wales.

There were just 1,342 sales in London Central during the quarter, only about 100 per week. Stock remains tight as potential vendors are reluctant to sell a tangible and prime performing asset, leaving transactions 27% below long term trends.

It has always been our opinion that there is no ‘ripple effect’ in the UK property market. London Central is an international investment market and global demand for the world’s best real estate continues unabated. This, combined with limited stock levels will continue to underpin prices. A view that is supported by other independent market commentators like Knight Frank, Savills and Jones Lang LaSalle.

Prospects for the wider national housing market, on the other hand, remain bleak. With few commentators projecting any significant growth over the next year, prospective buyers are reluctant to come in when the only likely direction for prices is down. Fear of the fallout from the government’s austerity measures is also stifling activity.

Deepening concern over the global recovery, combined with disturbances in the Middle East has reinforced investor appetite for blue chip assets which can ride-out fluctuations in the markets. London Central ticks all the boxes. It is not only a hedge against political or economic instability in their domestic region; it is also a proven performer at a time when the stock market continues to oscillate.

 

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