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Prime London housing market stabilising

Wednesday, 14 January 2009 1:41 PM

Primelocation.com have released a House Price Index (HPI) today and say their research shows the London housing market is stabilising.

Asking prices in prime London areas rose by 0.55 per cent (£7,001) in December, the second successive month of rising values, meaning they are now 3.8 per cent higher than in December 2007, according to the property search portal.

The price rise coincided with a reduction in the volume of available stock on the market with December's stock levels -3.8 per cent down on the levels recorded in December 2007.

Andrew Smith, Primelocation.com's head of insight, said: "Over the past couple of months prime agents have reported a modest upturn in activity (albeit from a very low base), a trend which can be attributed to the impact of falling prices, lower interest rates and a rise in demand from overseas buyers attracted by the dip in the value of Sterling.

"This explains the recent stabilisation in asking prices and provides tentative evidence that we are beginning to approach the bottom of the market. However, it's important to bear in mind that we have a way to go yet, and buyers are still managing to negotiate substantial reductions on asking price.

"With the economic situation worsening and some pundits predicting that unemployment will hit three million in 2009, we expect the coming year to be a difficult one for the housing market."

The HPI also showed how the letting market is still struggling in London, with the City recording the largest fall of -2.3 per cent over the month.

Andrew Smith, added: "Job losses in the City have hit the lettings market hard, as has the decline in demand from the corporate sector.

"This fall in demand has been exacerbated by a rise in supply as frustrated sellers look to the lettings market as a way to side-step stagnation and price falls on the sales side.

"The rise in the amount of available stock means that there is much more competition in the rentals market and landlords - accidental or professional - will need to price accordingly if they want to reduce the potential for periods void of any income.

"We would urge frustrated sellers to think carefully before they decide to rent and to check first with letting agents to see if their property is appropriate for the local market and meets tenants' expectations."

Asking prices in December were strongest in West/South West London (0.69 per cent) and weakest in Islington, City and Docklands (-0.17 per cent).

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