London Again: Property Prices Booming
2005 was certainly a year of two halves. January to June was very slow and many in the property industry were not hopeful of a revival. However, before we knew it, all changed in July and the market rallied. It was a trend that ran to the end of the year.Better still; West Hampstead's housing market has got off to a flying start this year, with property prices posting their biggest jump for 18 months. Some economic commentators had predicted a fall in property prices. But those of us handling the sales of second-hand homes - which do of course make up the vast majority of property stock for sale in the UK - and are nearer to the everyday market than most, felt that the mood was optimistic. This has been confirmed by national building societies and banks that have just reported the biggest monthly price increase since July 2004, at the height of the boom.
Inevitably when there is a quickening of pace in the market there are fewer properties for sale. This is the case now and points to a very active spring with eager competition for the best flats and houses. Already, in many instances recently, Paramount have agreed offers within 48 hours and have even achieved over the asking price.
In London February is city bonus time. This year has a bumper one and certainly triggered a mini property boom in some of our areas.
But big city bonuses will not stimulate the whole market. They never do.
Early in 2005 the doom-mongers were predicting a violent bursting of the property bubble and the market in free-fall. Fortunately they were wrong. The reason is clear. Contrary to the previous market downturns the economy is stable, with low interest rates. Consequently market confidence has remained reasonably high. The downside is that recent price rises have deterred would-be first time buyers who have been forced to rent rather than purchase. It is first time buyers who really drive the market as a whole.
All this has kept the buy-to-let market relatively buoyant and we see no reason in the short to medium term for this to change.
When will first time buyers return in numbers? Simply, when salaries are raised to a point that first-time buyers can enter the market in numbers.
So, in the absence of an economic downturn and a large interest rate rise - or any other unforeseen event that would affect it - we are seeing a confident and steady property market, one that allows reasonable choice and some time for reflection for buyers, and encourages reason and a little patience in sellers. Enjoy it while it lasts.
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