UK market review - number 28, 2011

The year to date has, for us at least, been remarkably active with overall sales volumes up by no less than 30% and our number of lettings up by around 12%. Outside the top end of the prime central London market, we are selling primarily to UK residents and, a little counterintuitively, both capital values and rental yields have risen (or, in the case of the latter, at least kept pace). In any market, this is a sure indicator of an underlying, physical shortage of stock. A distinctive feature of this one is the dominance, even at the lower price levels, of cash-rich buyers.

In the upper price levels, cash purchasers have long been the norm. That's not to say that none of the buyers of the several £4 million+ houses we have sold in SW3 and W11 this year has taken out a loan. Some have, but they have tended to be relatively short term, essentially corporate loans to wealthy buyers from overseas. Still in central London, but under the £1 million mark, traditional mortgages have been more common, but the great majority of our sales this year have been either to pure cash buyers from overseas or, just as often, to UK residents with at least 50% equity. Even at our lowest price levels in central London (realistically, around £320,000), we are struggling to identify a single buyer this year who has had less than 30% equity. Most have had far more.

Nor does the picture change much as one moves out of town. Our Teddington and Weybridge offices, for example, have enjoyed a string of sales of riverfront flats, all at around £400,000 and sold to mortgage-free retirees selling a larger house. Of other sales at around this price level, the great majority involve either no mortgage, or one of 40% or less.