|
LONDON MARKET COMMENT
Bulls at large in central
London
Fuelled by rising incomes and a shortage of stock, values
have risen sharply in central London and are set to
do so elsewhere.
In all central areas we are seeing buyers fighting for
properties in a way they have not done for three or
four years, causing jumps of 10% or even 20% on a year
ago in some instances.
Last year in this publication, we argued strongly that
London property was undervalued and on the verge of
a cyclical upward
swing ('Time to take advantage'), but that this would
not happen until we saw a much broader restoration of
faith in the Stock Market. Since that time, the FTSE
100 has risen by over 1,000 points. Faith restored,
demand is now seriously ahead of supply. A typical consequence
is our recent sale of a maisonette in Pimlico which,
last spring, would probably have sold for less than
£700,000. This year, notching up no fewer than
26 viewings on the first day of our marketing campaign,
we received four bids at the asking price and three
above it, all the latter being for more than £800,000.
Nor is this an isolated instance. A property we have
just sold in Ranelagh Grove, Belgravia, for example,
quickly achieved almost £1.5 million. Last year,
when it was £1.325 million, few buyers were interested.
In Holland
Park, meanwhile, typical smaller houses which last
year sold for £1.75 million are now fetching £2
million - if you can find one for sale.
Top left: Vauxhall SW8,
£1,950 per week
Top right: Pimlico SW1, £795,000 guide
|
|
Supply has been a real problem over the
first quarter of 2006, but is easing (supply
traditionally increases as the year progresses towards
the summer). This will reduce pressure on the present
level of capital growth. That said, the strong rate at
which new intending purchasers continue to
register reveals no let up in demand, suggesting that
prices will carry on rising, if
less dramatically, for several months to come
at least. Furthermore, the solid nature of
that demand is emphasised by the fact that it
does not depend upon one source: we have
plentiful stocks of both UK-based and
international buyers. Indeed, somewhat
unexpectedly, international enquiries are
increasing from all quarters. A generally
stronger dollar - partially strengthened,
some argue, by high dollar-based world energy payments
- appears to be encouraging US buyers (and making US corporate
tenants more comfortable).
The same high energy prices also appear to be increasing
the coffers of London property
buyers whose wealth derives from Russian
oil and gas and adding to the amount of
money being put through the City, increasing the incomes
of many buyers working there. Thus, so long as the Stock
Market can carry on shrugging off the consequences of
high energy costs, everyone, it seems, is winning and
the property bulls will continue to charge.
Above: Twickenham, £1,275 million
guide
Above left: East Sheen SW14, £1,595 million guide
Left: Holland Park W14, £2,750 per week
Below left: Wimbledon SW19, £1.6 million guide
Below: Earl's Court SW5, from £550,000 to £1.5
million. |
