Musings of a London Property Finder

Average house prices have fallen 10% over the year to the end of October 2008, according to The Land Registry, the government official House Price Index.

London and Brighton property have not fared as badly, down 8.6% and 7.2% respectively although the picture is very mixed for the South East region as a whole.

Waltham Forest was the worst hit London borough, registering an annual house price fall of 9.2%.  Wandsworth and Lambeth have also been badly hit, with average price falls of -7.3% and -8.2% respectively. 

Westminster and Harrow are the only boroughs to have held onto gains made since September last year, registering annual house price growth of 0.1% and 0.7% respectively.  Southwark and Barking and Dagenham registered the lowest falls with reductions of 0.5% and 1.9% with Bexley, Brent, Enfield, Hackney and Hillingdon closely behind with marginal price falls of circa 2% on last year.

Kensington and Chelsea which has generally held up quite well this year dropped 1.7% in October and registered an annual overall price fall of 3.6%. 

During the first quarter of this year it looked like prices were more likely to hold in London than in the South East.  Todays data shows that many of the Home Counties have out-performed some London boroughs.   

Windsor and Maidenhead where there are a plethora of very large executive homes and often little reason to sell in a downturn, has performed the best of the South East regions, registering price falls of 2.7% over the last year – nothing to write home about.  Price falls of under 5% are reported in Buckinghamshire, Thurrock and Surrey and average house prices in Kent are 5% less on the nose.

All other areas in the South East are registering house price falls of above 5% with the most significant house price deflation in Northamptonshire where average house prices are worth 10% less than a year ago.

The number of property transactions has also continued to fall across the board apart from sales of less than £100,000 and yes, there are some in London – there were 58 property sales in August for under £100,000.

Clients who have chosen us as their Property Search Agents will be aware that negotiated final prices depend very much on the situation of the vendor and the realism of the initial asking price, but that price cuts of 20-30%+ and more have become more common.  As professional Property Finders, we try to dissuade Clients from buying properties which we believe are over-valued but although these figures may sound alarming, they are only of concern to people at risk of going into negative equity.  Most people who have bought wisely and had their homes for five years or more should not be affected.

Homeowners wanting to move who have a reasonable amount of equity in their homes should still be able to do so – the key to a successful purchase in this market is:

1.  Ensure that the discount negotiated off the current market valuation of a new home exceeds any negotiation on the home sold
2. Research the new area thoroughly so that you have a good idea of whether it is going to fare well in years to come and take future price falls into consideration when you offer
3. If you  don’t feel confident about the above – speak to a London Property Finder who does – our number is 020 7923 7564

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Tags: Brighton house prices, Brighton Property prices, Hampshire House Prices, house price crash, house price falls, House Prices, Kensington and Chelsea house prices, Kent house prices, London house price crash, London House Prices, London Property Finder, London property prices, Westminster property prices, Windsor & Maidenhead house prices

Musings of a London Property Search Agent

8 London boroughs have defied the gloom mongers and posted slight price rises despite the credit crunch.  Westminter and Hackney have the highest annual price rises, with average house prices in each borough increasing by 2.7% in the 12 months to September 2008.  Harrow, Kensington & Chelsea, Lewisham and Southwark have also seen marginal price rises over the last year of 1.9%. 1.7%, 1.3% and 1.4% respectively.  Barking and Dagenham have managed a 0.6% rise and Camden have seen a 0.9% rise over the year.  House prices in the Olympic borough of Tower Hamlets is officially flat.  Remaining London boroughs have all seen slight house price falls, the worst affected being Waltham Forest where average house prices have fallen 5.8% over the last 12 months.

Readers who have followed the monthly price changes which we have documented here will remember that the first 9 months of the credit crunch brought slight rises and falls on a monthly basis.  We would suggest that anything less than a 3% swing either way is indicative of a flat market so for those living in the London boroughs mentioned above, that is good news. 

Average prices across Greater London as a whole however have dropped 6.1% over the last year and prices have dropped on a consecutive monthly basis since April so there is definitely a downturn overall.  Thus far, however it has been a far softer landing than many predicted last year: today, average London house prices are at the same level as they were in April 2007.  Average prices in the Home Counties are at the same level now as they were in November 2006.

We take the traditional definition of recession that it is when GDP drops each consecutive quarter for a year.  Given that GDP is dropping, it is likely that the UK economy will prove to be recessionary in 2009.  The effect on house prices will depend on a number of factors including how the newly unemployed manage to keep themselves afloat or not and the number of people who have funds or are able to borrow funds to invest.  The government has done a great deal to soften the blow as much as possible.  Nationalising the banks and pledging to reintroduce responsible lending on projects or to people which are good credit risks will inevitably reinvigorate the market if the plans do come to fruition. 

We know there is a great deal of money available and the will to buy at the right price, from the way the auction market in London and the South East has performed over the last year.  Bear Sterns, Lehmans, Fannie Mae and Freddie Mac have had little impact on the London auction market.  This year auctions have been well-attended and few period London homes have sold for in excess of 25% less than the price of a renovated property in an estate agent’s window. 

There is demand for London property and we believe there always will be.  The crowded South East corner of the UK is sought-after and our experience is that the minute people are able to afford to buy, they will grasp the opportunity.  There are a great deal of thirty somethings who have wanted a home to own and call their own for years.  There are a great deal of people who remember or even got their fingers burnt following the dot com crash and who have seen the value of their savings and pensions plunge in recent months.  This group will look again at property and even with conservative rental valuations realise that buy-to-let remains a sound proposition for investors able and willing to do their homework, buy the right property in the right location and most crucially, at the right price. 

The availability of credit will inevitably continue to affect the property market.  If the market can be restarted, some will find property bargains at the top end as well as the bottom end of the market as middle managers and higher-paid executives are laid-off.  There is little doubt prices will drop in 2009.  The extent to which the market is affected will depend on how long the recession and the number of people affected.  Will there be a crash?  It seems unlikely at this juncture but falls in the average house price of up to 20% in the coming year seem likely.

Should people put off buying and rent in the interim instead?  I would suggest not.  The best thing to do is be flexible.  When you see a home you want or a bargain, go for it and try to negotiate it down to a price which is sustainable, that you can afford and a price which won’t fall further regardless of the market.

House price indices are useful barometers of what is happening in the market and we believe the Land Registry index is the best, based as it is on real sold prices.  But it is just an index.  Your house might be bigger, smaller, quieter, more private, closer to amenities, better designed, in a better road or more sumtuously decorated than the average house in your borough. So if you can sell for a good price and negotiate a bargain on your next home, absolutely you should move now.  It’s all about playing the market and most people won’t move until house prices recover.  Selling in a downward market should mean you gain a little between your sale and your purchase.  Selling in an upward market frequently leaves vendors wishing they had asked for a little bit more.  The London Propeerty Search Agent is ready when you are ready to buy.

http://www1.landregistry.gov.uk/assets/library/documents/251208.pdf

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Tags: affect of recession on house prices, buying in a downward market, downward market, Hackney house prices, house price crash, house price index, Land register house price index, land registry house price index, liquidity, London house price crash, London House Prices, London property crash, London property prices, London Property Search Agent, Property price crash, recession, selling in a downward market, South East House Prices, Westminster house prices

Musings of a London Property Search Agent 

“The long-run trend growth in real house prices in the UK is around 2.7% per annum and there is no reason to expect that over the longer term house prices should not continue to go up in real terms, even if we are going through a sharp correction now,” says Fionnula Earley, Chief Economist at Nationwide.

According to the Nationwide house price index, prices across the UK have fallen 12.4% versus the same time last year, with the London region (Middlesex, Enfield etc) down 9.4%, the Home Counties closest to London (Central and West Kent, South Essex, North & West Surrey, Hertfordshire etc) down 10.3% and the Outer South East, (Brighton & Hove, Oxfordshire, New Forest etc) down 10.9% versus last year. 

The good news is that London boroughs haven’t fallen so far – down 5% overall with several boroughs experiencing a negligible drop.  Bexley, Brent, Bromley, Havering and Merton have only seen price decreases of 1% over the last year and average prices in Hackney and Harringey have gone down by 2% since last year, according to Nationwide’s figures.

Hackney is also one of the most price-resilient boroughs according to the Land Registry figures but interestingly, Westminster, which has experienced growth according to the Land Registry, appears to be one of the worst affected boroughs according to Nationwide, who have prices down 8% since September last year.

A like for like comparison is difficult as the Land Registry figures are a month behind those of other indices and relate to the 12 month period to the end of August 08.  They show the borough as having experienced house price inflation of 8.4% – a 16.4% difference versus Nationwide.  Nationwide caveat their sub-regional data because prices are based on properties in the sample rather than the more robust mix-adjusted methodology.  Also the average price per square foot is grossed up by the average square footage in the borough, providing an average house price, so it is a simplification.  The Land Registry figures in contrast are based on actual sold prices.

Westminster is an interesting case because it includes some of the most expensive property in the world ie Mayfair and Belgravia but also areas popular with bankers and American corporate relocation personnel such as Notting Hill and St Johns Wood so it will be interesting to watch how the different indices deal with it in the future.  A 16% difference of opinion however seems rather ridiculous and just goes to show that you can prove anything with “damn lies and statistics”!  This London Property Search Agent seeks to wrinkle out the truth by careful analysis of reliable evidence based information!

http://www.nationwide.co.uk/hpi/review.htm

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