London Market Update

03 March 2010

David Adams, residential director, Chesterton Humberts reports:

“There is a dire shortage of property in the £500,000 to £1.5mn range in the London market. As bank finance has become more available, people are once again starting to upsize into this bracket. At the same time, a significant number of £2mn plus homeowners are attempting to downsize into this range.

“Fears of impending capital gains tax changes may be influencing the downsizers, but the driving forces appears to be a strong desire to reduce levels of debt.

“Continuing pressure on sterling has meant foreign interest in London property remains strong. The number of Asian buyers has been growing and London remains appealing to continental European buyers. There would have to be a considerable rise in the number of properties for sale to satisfy demand which means prices are firm in the £500,000-£1.5m bracket in London. Owners in this bracket appear to be waiting until after the election to sell or until interest rate rises begin to force sales.

“The £2m plus bracket looks less firm with more stock coming to the market daily.

“Outside of London, the shortage of property for sale is severe but more manageable because of the lack of foreign buyers.

“The East Midlands and the North are the only areas suffering from a dearth of buyers.”