Market Analysis Spring 2011 London


While the wintry conditions of November and December had a greater impact on the property market outside London, the capital did not escape unaffected from the winter slowdown. Yet, the market has bounced back well from the seasonal lull and pent up activity is now helping to drive instructions and sales. London continues to suffer from a lack of stock and many Winkworth branches are reporting that demand remains far stronger than supply, particularly among families and up-sizers.


New Year recovery for appraisals and instructions


Having consistently fallen month-on-month since April 2010 (except for a slight rise in September), the number of sales appraisals and instructions to sell in the capital recovered in January and February. Uncertainty over the future health of the property market deterred many vendors from instructing an agent to sell their home over the second half of 2010 and the November and December snow was the nail in the coffin for any chance of a late recovery in activity. However, vendor patience had clearly run dry by the start of 2011. A 70% rise in the number of sales appraisals between December and January led to a doubling in the number of instructions to sell over the same period. And while the initial surge of instructions tailed off in February, the number of sales appraisals conducted by Winkworth’s London branches continued


6 Market Analysis Spring 2011


% %


to grow, rising a further 8% in February – a positive sign ahead of the busy spring period.


Appraisals and instructions are still below the levels seen over the same period last year, though. There has been a 25% fall in the total number of sales appraisals conducted between the months of December and February this year compared to last and an 18% annual drop in the number of instructions. However, much of the activity in early 2010 can be attributed to the surge from vendors who put off putting their property on the market for the whole of 2009. Uncertainty over the future state of the economy will certainly have had a dampening affect on the figures at the beginning of 2011. (Figure 3)


New Year demand causes stock to fall


Despite the rush of instructions to sell in January the total number of properties available on the market in the capital has continued the downward slide started in December. Between July and November 2010 stock levels remained stable, however, between November 2010 and February 2011 the number of properties available has fallen by nearly a quarter. A combination of low instruction levels in December and a surge in buyer demand in January has caused the drop in overall stock levels.


The surge in new buyers registering with Winkworth almost mirrors the increase in instructions to sell seen across London in January and was a welcome relief following December registration figures which were the lowest since


GDP CPI


Bank rate at end of period Claimant unemployment (m)


Claimant unemployment (m) RPI


CPI


GDP CPI RPI


UK key economic indicators UK key economic indicators


GDP RPI


...the capital did not escape unaffected from the winter slowdown.


-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6


%


-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6


-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6


2004 2005 2006


2007 2007


UK key economic indicators Bank rate at end of period


Claimant unemployment (m) Bank rate at end of period


100 150 200 250


100 150 200 250


50 0


4.1% 3.1% 2.4% 4.7% 4.5% 3.2% 20075.58% 2.39% 0.50% 0.50% 1.00% 2.10% * average of latest independent forecasts


0.85 0.85


1.05 20081.05 2009 2010 e* 2011 e* 2012 e*1.5


1.63 1.63


1.48 1.48


1.58 1.58


Figure 3 London - sales appraisals & new instructions Jan 2009 = 100


* average of latest independent forecasts 1.05 1.63 1.48


5.58% 2.39% 0.50% 0.50% 1.00% 2.10 2.1% 3.80% 2.9% 3.4% 3.6% 2.1


3.1% 0.8% -4.8% 1.5% 1.8% 2.1


4.1% 3.1% 2.4% 4.7% 4.5% 3.2 0.85


1.58 1.5


5.58% 2.39% 0.50% 0.50% 1.00% 2.10 * average of latest independent forecasts


1.54


2004 2004


2005 2005


2006 2006


2007 2007


2008 2008


2009 2009


2010 2010


GDP annual growth GDP quarter on quarter growth


2007


2008


GDP annual growth GDP quarter on quarter growth


GDP annual growth GDP quarter on quarter growth


2008


2.1% 3.80% 2.9% 3.4% 3.6% 2.1% 3.1% 0.8% -4.8% 1.5% 1.8% 2.1


3.1% 0.8% -4.8% 1.5% 1.8% 2.1% 2008


2009 2010 e* 2011 e* 2012 e* 2009 2010 e* 2011 e* 2012 e*


4.1% 3.1% 2.4% 4.7% 4.5% 3.2% 2.1% 3.80% 2.9% 3.4% 3.6% 2.1


2009


2010


100 150 200 250


50 0


50 0


Sales Appraisals Sales Appraisals


New Instructions to Sell New Instructions to Sell


Figure 4 London - sales properties on books Jan 2009 = 100


Sales Appraisals


100 150 200


100 150 200


0


New Instructions to Sell


100 150 200


50 50


0 50 0 200


Figure 5 London - prospective new buyers Jan 2009 = 100


200


100 150


100 150


200 50


50 0


100 150


0 50 0


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