Central London residential property market report
Date of Article
Dec 01 2010

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Catherine Penman, head of research, Carter Jonas, takes a look at the sales and lettings market across the capital.

Central London sales market
“A lack of quality stock for sale has fuelled prices over recent months with the market now turned towards the purchasers' perspective and away from the domination of the vendor which has been the consistent characteristic this year. 'Best in class' product is currently achieving in excess of 2007 prices, although potential purchasers remain very price sensitive and there is a widening price differentiation between the best and the rest. Demand is dominated by international investors, with domestic purchasers frequently priced out of the market.

“The market below £1.5 million is proving relatively active due to the ability, for some, to finance such product unaided. The prime bracket of £3 million and above is also proving active, provided that the properties are priced correctly. The price bracket in between both sectors (£1.5 - £3 million) appears to have a slower pace of activity across London, with a higher proportion of unrealistically priced stock. Purchasers within this bracket usually require some element of funding, which frequently delays proceedings.”

Central London lettings market
“The central London lettings market has witnessed a buoyant autumn. Rental levels across central London rose 5% during the third quarter of this year and by an impressive 15% over the last year. However they remain slightly below the level recorded in early 2008, prior to the credit crunch taking hold in the UK and global economies. Stock levels across central London are historically low although demand has remained relatively consistent. Indeed, a number of lettings have recently been taken to sealed bids illustrating the high degree of interest for good quality, correctly priced product.

“In light of the continuing difficult economic climate and funding restraints, demand within the central London rental market is forecast to remain strong. That said, applicants remain price sensitive and whilst rental levels are projected to increase, it is predicted to be at a lower rate than witnessed during this last quarter at around 3% to the year end.”

Holland Park & Notting Hill
Gareth Jones, head of sales, Holland Park & Notting Hill, Carter Jonas, commented:
 “Autumn saw a very good level of activity in the Holland Park and Notting Hill market with a number of strong sales taking place (predominantly in the £1-3 million zone). As we head into winter, stock levels are low although demand from buyers remains strong. Overall, well priced properties are still selling well but buyers remain incredibly price sensitive.”

Lisa Cavanagh-Smith, head of lettings, Holland Park & Notting Hill, Carter Jonas, commented: “The Holland Park lettings market continues to perform well, with prices remaining resilient. Strong demand for one and two bedroom flats has led to a high volume of business at impressive prices. The family house market has slowed a little as corporate relocations are put on hold until the New Year. In the interim, clients are encouraged to be sensible with their pricing until seasonal demand returns. Prices in general are expected to remain strong for the remainder of 2010 and rise along with demand in 2011.”

Knightsbridge & Chelsea
Ian Brownridge, head of sales, Knightsbridge & Chelsea, Carter Jonas, commented:
“Primarily driven by international buyers, the market benefits from a reasonable stock level and a healthy supply of applicants. Prices over the last quarter have remained stable although over the longer-term, Kensington and Chelsea have maintained consistent value increases. This is forecast to continue. There remains a disconnect between purchaser and vendor aspirations although this is reducing, which is resulting in a faster pace of activity.”

Giles Barrett, head of lettings, Knightsbridge & Chelsea, Carter Jonas, commented:
“The Knightsbridge & Chelsea office covers a broad area and has seen some impressive year-on-year increases achieved in all areas of the market. Strong demand combined with the historically low pool of property has seen prices, in some cases, achieving levels reached in early 2008. After the busy summer period applicant levels are marginally down meaning the sharp increase in prices will calm until the New Year. Generally, prices are holding firm and are expected to increase as momentum returns to the market at the start of 2011.”

Hyde Park & Bayswater
Barnaby Joyce, head of sales, Hyde Park & Bayswater, Carter Jonas, commented:
“Activity levels remain relatively high within the market, with reasonable stock levels apparent. Despite an overall shortage of applicants in recent months, those that are active tend to be of good quality and well motivated. Middle Eastern and Russian buyers dominate this market in addition to those who currently live within the City but are seeking a more central location with more space.”

Emma Hogan, head of lettings, Hyde Park & Bayswater, Carter Jonas, commented:
“Unlike many of the other central London markets, the Hyde Park lettings market currently benefits from a supply of good quality stock. The quality and number of applicants during the summer months has proved steady with an increase in activity from international sources, via relocation agency contacts.”

Marylebone & Regents Park
Tim Macpherson, head of London residential, Carter Jonas, commented:
“There is a severe lack of good stock across the marketplace in Marylebone which if not addressed may stifle further price growth. The one exception to this is the £3 million plus bracket which has proved active and witnessed a number of key deals recently and achieving top prices. The market benefits from a number of high quality applicants with a recent return of buy-to-let investors to the market.”

Rachel Willis, head of lettings, Marylebone & Regents Park, Carter Jonas, commented:
“The Marylebone lettings market has proved more active than any other central London market, benefiting from an exceptionally transient rental market attracted to its “village style” living. Stock levels are very restrained which has, inevitably, impacted upon activity levels and is forecast to remain limited until the year-end. As a result of the shortage of stock, rental levels are increasing with applicants willing to pay top prices for top quality product. “

Mayfair & St James’s
Ashley Coleman, head of sales, Mayfair & St James’s, Carter Jonas, commented:
“In line with the general theme across the capital, the Mayfair sales market is characterised by a lack of stock. In some instances, vendors remain overly optimistic in pricing expectations, stalling some potential sales. The number of high quality applicants remains high within the market which has buoyed prices. The trend for the conversion of office buildings back to their original residential use continues and several are currently under construction which are expected to prove attractive and achieve top prices.”

Simon Fernandes, head of Lettings, Mayfair & St James’s, Carter Jonas, commented:
“The buoyant Mayfair lettings market is being driven by strong demand from young professionals, corporate relocations and frustrated buyers. However, the lack of available properties in this popular price bracket of £500 to £2,000 per week has led to shorter void periods, sealed bids and some impressive prices achieved for clients. Prices are forecast to continue to rise into 2011.”