London property prices could continue to soar

There are early indications that the general price of property for sale in London will continue to appreciate throughout the rest of this year.

With property consultants Knight Frank reporting a 20 per cent year-on-year rise in buyer registrations in June, London property prices are continuing to rise, with 34 per cent growth in prices for the capital's best addresses over the past year.

In fact, luxury home prices in central London are now at a record high, thanks mainly to a surge in overseas nationals buying property in the capital.

Greater demand has helped to push up the average price of a luxury home in Central London. This is reflected in the price of property for sale in Kensington and property for sale in Mayfair. This can also be seen in places like Richmond, which provides further evidence that London is a great place to invest for solid capital growth.

The study shows that more foreigners are taking advantage of the weak Sterling and also see London as a safe haven to protect their wealth from political and economic instability in their home countries.

Charles McDowell, a senior sales negotiator at Knight Frank, said: "We are seeing the very wealthy from the world's trouble spots coming to the UK – they think it's a no-brainer."

Leading London based estate agents Marsh & Parsons report that they have an average of 13 buyers registered for each home for sale in London, with this ratio much higher in prime London.

The company recorded its second ever highest monthly tally of property sales in the capital in March of this year, despite the fragile state of the economy, they firmly expect demand to grow further as economic conditions improve, pushing prices higher.

"It's not surprising that London property prices have increased so far this year," said Peter Rollings of Marsh & Parsons. "We have enormous numbers of buyers coming into the market."

With enormous national and international appetite for homes in primarily locations, such as property for sale in Chelsea and property for sale in Fulham, among others, the gap between London property prices and the rest of the UK is widening.

Research from estate agents Savills reveals that the gap between London residential property prices and average values in the rest of England and Wales is at its widest for ten years.

The typical home in London is now worth 113 per cent more than the average in England and Wales, their analysis of Land Registry data shows. This compares to a differential of 73 per cent in 2005/06 and just 47 per cent in 1995.

Consumer confidence in the UK housing market is improving, according to a survey by Building Societies Association (BSA) which shows that a growing number of people are far more positive about the market's future outlook.

But while property prices are generally expected to increase in the long-term, a fragile economy and stringent mortgage lending conditions are restricting property sales activity, currently at a historic low, preventing any significant capital growth, with the exception of London, which is in a league of its own.

Savills anticipate that London property prices will rise by around 30 per cent over the next five years, and very few pundits would disagree.

Source: Marsh & Parsons Estate Agents – Property for Sale in Pimlico, Richmond

Cheap mortgage rates increases demand for homes in London

Cheap mortgage borrowing rates is an even greater incentive to now look at potentially buying property in London.

Fresh research by Moneyfacts.co.uk shows that mortgage borrowing costs – both fixed and tracker-rates – have fallen to their lowest level in 23 years, which suddenly makes the idea of buying property in London considerably more attractive.

Improving access to cheap credit, caused by a record low interest rate, means that more prospective buyers are looking at property for sale in Hammersmith, property for sale in Parsons Green, property for sale in Fulham and property for sale in Brook Green, among other parts of London.

A shortage of homes in London has been pushing prices higher in recent months, but cheap mortgage rates mean that more homebuyers, including first time buyers, can now make that leap into new homeownership - an exciting but often financially difficult step.

With very few signs that interest rates will increase in the short-term, lenders have been competing for new business by steadily lowering their mortgage borrowing rates.

According to the research, two-year fixed rate mortgages now average 4.32 per cent, rising to 4.92 per cent for a three-year fix, with a five-year fixed rate at 5.29 per cent. A two-year tracker mortgage now averages 3.37 per cent.

"Earlier this year the market expected a rise in bank base rate that saw mortgage rates start to rise," said Michelle Slade, spokeswoman for Moneyfacts.co.uk. "An imminent rise in bank base rate now appears unlikely and the cost of funding on the swap rate market has reduced."

She added: "Lenders appear to be applying cuts equally across all LTV [loan to value] tiers, which is good news for first-time buyers, as previously cuts were only being applied to the lower LTV bands."

Wherever you are looking to buy property, whether it is property in Earl's Court, Kensal Green, Stockwell or even property in Putney, it appears that competition from other prospective homebuyers, including investors, is growing.

With a number of would-be purchasers being forced into rental accommodation instead of buying, rental values are rising. Consequently, many investors are adding to demand by purchasing homes across the capital, from property in Notting Hill to property in Maida Vale, in a bid to take advantage of soaring tenant demand.

The latest monthly residential property survey from Hometrack confirms that property searches are indeed improving. The number of home sales agreed by estate agents in May had risen to 10.6 per cent, the highest since 12.6 per cent in March.

Richard Donnell, Director of Research at Hometrack, said: "The first six months of 2011 have seen the housing market holding up better than many had expected. Low transaction volumes, low mortgage rates and forbearance by lenders limiting the number of forced sales have all played their part."

It is unsurprising that more people are looking for property for sale in London. Aside from being a home in which to reside, property also remains one of the best investments, offering high returns.

Source: Marsh & Parsons – Property for Sale in Kensal Green, Stockwell, Earl's Court

Busy summer anticipated for London property market

With more Brits and a flurry of overseas nationals buying property in London, leading estate agents Cluttons predict that it could be a busy summer period for London's property market. This could spell good news for vendors with property for sale in Richmond, property for sale in Pilmico and property for sale in Barnes, among other parts of the capital. 

Despite the slowdown in the property market nationwide, demand for homes across London has strengthened in recent months, ensuring a greater volume of enquiries for properties in Barnes, Richmond, Pilmlico, Stockwell and Notting Hill, among other popular destinations.

This growing demand looks set to continue and fuel the London property market over the summer, traditionally a quiet period for the housing market, with buyers conducting searches over the holidays in fear of missing out on a suitable property. 

James Hyman, Partner for Residential Sales at Cluttons, said: "There is so much pent up demand in the market that competition for good property is as fierce as ever. Buyers are telling us they are wary of postponing their search over the holidays in case they miss out and will instead continue to actively look throughout July and most of August."

With Savills reporting that a total of £16.5 billion has been invested in the capital's housing market by foreign property investors in the past five years, it comes as little surprise that more Brits are postponing their summer holidays to focus on buying property in London, with demand for property in Chelsea through to property in Battersea continuing to rise.

"There are more buyers coming from India and Pakistan than China – and they're spending more," said a recent Savills report. "This group is now the most important to the London market among the emerging economies."

Many Asian investors, for example, are attracted to London because the market looks ripe for growth. The city now offers better value than Beijing, Shanghai or Hong Kong, according to recent research by Knight Frank.

A Knight Frank report said that with a budget of £400,000, someone could purchase a freehold house in London, but in Beijing you can't even get a central apartment for that sort of money.

"We're forecasting 30 per cent growth over the next five years in property prices in London," said Liam Bailey of Knight Frank.

Property has long been considered to be a good investment, and with many pundits projecting future house price growth, now could be a particularly good time to invest in London's property market.

John Elliott, Managing Director of house builder Millwood Designer Homes, says that with the cost of living continually rising, buying a new home could be "more of an investment than you think" and "now couldn't be a better time to buy".

Elliot points out that with a national shortage of new homes being built there is insufficient supply to meet demand. House builders are constructing fewer new homes now than at any time since 1923 and inevitably this shortage will cause house prices to rise.

In fact, new data from the Land Registry, widely considered to be one of the more reliable barometers of house prices, shows that house prices fell in every region of England and Wales except London in May.

Average London property values rose by 2.9 per cent against an average nationwide decline of 0.4 per cent in May.

The Land Registry figures clearly illustrate the pressing need for more homes in London, suggesting that prices will rise further in the capital, as demand continues to grow.

Source: Marsh & Parsons – Property for Sale in Stockwell, Chelsea, Notting Hill