As we enter the New Year Nick Churton of Mayfair Office gives an assessment of the London property market over the past few months and some ideas about the coming year.
"Since the beginning of 2009 the Central London property market has confounded just about every one involved with it. The weak pound has attracted overseas buyers who have been absent for some years. Buyers from France and Italy have been particularly notable.
But buyers are being choosy. Locations such as Mayfair, Belgravia and Knightsbridge have been especially popular but only the best property examples are generating special interest. Condition is very important, as is interior finish. Good is no longer good enough. Exceptional finish is now the accepted norm if a house or flat is going to get top price. This is the international effect: expectations are high and this is certainly having an influence on how London home-owners modernise and improve their homes.
Well-appointed properties in the best locations should continue to sell well - in many cases at 2007 levels. This activity in prime Central London will, no doubt, ripple out most quickly to the South East, central south coast and prime centres, such as Oxford, Cambridge, Winchester, Bath and York.
Whilst the stock of property for sale remains extremely limited prices will be forced upwards. But this could change rapidly in the New Year if people are encouraged to come to the market through rising prices – thus reversing the trend and creating a second dip in property values.
However if the supply of property remains relatively low because of continued rock bottom interest rates and the fear of rising unemployment, there is unlikely to be a repeat of the bargain prices of late 2008/early 2009. Also, any weakening of the pound against the dollar or euro will see further interest from abroad that will positively affect supply and demand for house sellers.
The general election may also have an influence on the market. The government will want to do its utmost to improve the public mood, and we can expect that there will be further pressure on the banks to increase the residential lending necessary to stimulate the housing market.
Central and southwest London are expected to lead the way in the house-price recovery into 2010. With low levels of stock and growing confidence and demand, buyers will be forced to broaden their search to find value. Areas that have been lagging in the recovery will benefit from this effect and there will be a direct impact on prices as family movers push up house prices in metropolitan suburbs and major towns. City centres, burdened with an over supply of flats, will take longer to recover but as the buy-to-let market gathers pace these areas will also begin to show signs of improvement."