London market shows first signs of slowdown

Friday, 7 December 2007 12:00 AM

Property prices in central London have begun to slow, in line with a moderating market across the country, according to estate agents Knight Frank.

The capital recorded growth of 1.6 per cent during the last three months, bringing annual growth down to 30.6 per cent - a fall from the level of 34.1 per cent recorded in October and the high of 37.9 per cent seen in August.

Over the summer the capital witnessed prices rising by over three per cent per month, with 3.9 per cent recorded in July alone.

"The most notable change on the back of the crunch was the rapid turnaround in market sentiment. In early summer we were in the midst of the strongest market for nearly 30 years, now we have seen a sellers market replaced very quickly by a buyers market," explained Knight Frank.

"The new market sentiment means that vendors have to compete much harder to achieve timely sales, and ambitious pricing has effectively ended across the prime and mainstream markets."

However, the superprime market has defied this downward trend and has continued to grow.

"There is sometimes a degree of disbelief that the top end of the market is continuing to perform so well. The reason why is best explained when we remind ourselves that very expensive properties are still transacted in low volumes," said Knight Frank.

"In reality even a small number of very wealthy buyers can support strong pricing in this market."

For example, prices for properties selling for over £6 million rose by three per cent in the three months to November.

Properties worth £1-2 million saw prices increase by 0.3 per cent.

Demand in these markets has come from Russia, Kazakhstan and the Middle East in particular.

"Not only do record oil prices help some of these buyers bid prices higher, but the fact that the crunch has left their home economies largely untouched adds an element of security to the London market," concluded Knight Frank.

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