Knight Frank Prime Central London Residential Index

Knight Frank Prime Central London Residential Index - January 2010 results

Headlines:

• Prime central London prices rose 1.1% in January, the 10th consecutive month of price growth • Last month’s price growth was the slowest since August 2009 and is markedly lower than the 2.1% recorded in December 2009 • On an annual basis price growth is now running at 11.5% • Prices are now 15% above the low point reached in March last year, but 12% below the market peak reached in March 2008 • The strongest price growth has been experienced at the top of the market - the £10m+ sector saw 1.5% growth in January, continuing the process of catch-up this sector is experiencing Liam Bailey, head of residential research, Knight Frank, commented: "In the space of little more than 12 months we have seen a shift from a near market meltdown to boom rates of price growth.

Since last April the combined impact of ultra-low interest rates, government stimulus, and rising confidence from buyers - about their own and the economy’s prospects - have served to push prices higher, with 15% growth in the ten months to January this year. As we stand, at the beginning of

the 2010 spring market, there still seems to be considerable life left in the recovery in pricing. While buyers are back in force, vendors are few and far between, creating a significant imbalance between supply and demand. Slim pickings are the fuel that has been driving this market bounce. We are seeing increased demand

in pretty much every price bracket, particularly the £2m-£5m ‘City’ segment. In fact, our figures suggest that applicant volumes in January were 15% above their fiveyear average. On the flip side, most of our offices have stock levels 15% to 20% below normal for the time of year. Some have seen declines of 30% or more.

Anecdotally, the real problem for agents has been in encouraging

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prospective vendors to commit to a meaningful relationship. There are lots of people playing the dating game, inviting agents into their lives to inspect their homes and provide indicative asking prices, but when it comes to commitment they are still wavering. There are several reasons for this

delay. The election is cited by some reluctant vendors looking for reasons not to take the next step. For others, however, it has galvanised them into action with the belief that early 2010 is a good time to sell - a window of opportunity before the election campaign starts. The lack of stock in the market

can create something of a vicious circle, with prospective vendors waiting until they can see a wide range of choice for their next move before committing to a sale of their own property. There is also a degree of

nervousness regarding the likely impact on London’s economy following the withdrawal of the governmentís multi-billion pound economic stimulus package. More importantly it is the ongoing machinations around bonus payments that has provided a reason to delay for vendors and also, to be fair, for a good number of purchasers. A growing concern for agents is

heightened vendor expectations. Buoyed by heady talk of price increases, some vendors are beginning to request that asking prices are set at close to, and even above, peak levels again. With achieved prices rising and the average ratio between asking and achieved prices narrowing, there are some clear arguments in favour of a more ambitious stance. In reality, for anything other than perfect properties, this is a risky strategy as the market has not been truly tested by a well-stocked larder. If supply does rise it could serve to hold those ambitiously priced properties on the market.

The hope is that the election, and subsequent budget, will provide a degree of certainty regarding the regulation of the financial services sector and taxation - both of critical importance to the London market. The prospects for continued price

growth in central London, particularly at the mid to upper end look good.

The UK Post Election; Good for You?

By James Garland, Director at Green Issues Communucations, one of the UK’s leading political planning consultancies.

With the Labour Government seemingly intent on hitting the self- destruct button, David Cameron’s Conservatives look increasingly more likely to win power at the upcoming General Election. But what will this mean for the property sector and what will the key priorities of the new government be with regard to planning and housing delivery? Conservative planning policies

seem reliant on turning the NIMBYs into YIMBYs, (their words, not mine), something that will require a significant change in attitude in local communities – to say the least! The cynics amongst us will have to bite our tongues for the foreseeable future but they are exploring a number of ways to make this happen. The most obvious is through financial incentives. Central to this is the idea that local communities should be able to see more clearly the benefits that new developments will bring. The April 2009 Housing Paper entitled ‘Strong Foundations’

bonds to local communities so people can more easily influence where the money is being spent. The Tories are also seeking to

involve communities at a much earlier stage in the planning process and to engage with them in a more meaningful way in order to negate the ‘over my dead body’ attitude to development which is all too prevalent. For developers, this will mean an end to ‘box ticking’ consultation and even the prospect of sitting down with community representatives with a blank piece of paper before drawing up masterplans. From the perspective of local communities, this is, once again praiseworthy and certainly politically astute in terms of shoring up votes in the Conservative heartlands, but for developers, this idea is likely to be met with a somewhat different reaction.

talks

about contributions worth six years worth of assumed Band D Council Tax equivalent per new dwelling. However, what is not clear is how these contributions are going to be funded given future cash constraints on the Treasury. Most likely is a realignment of existing council funding structures and the feeling is that incentives will only arrive after the Government has looked at the grants to Councils. A further mechanism being

explored would be via Section 106 contributions. The Conservatives aim to make these contributions more transparent and are even looking at the idea of issuing

Correction to Housebuilder & Developer, Dec/Jan 2010

Housebuilder & Developer would

like to make a correction to the telephone number for BioBased Insulation which appeared in the Dec/Jan 2010 issue. The correct telephone number is

0845 1162 407. Please see page 26 for further information. We would like to extend our apologies to BioBased Insulation and our readers for any inconvenience caused by the typo. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24