Prime property values in London fall despite activity rise

Reports from leading estate agents show asking prices for properties for sale in London dipped in the second quarter of 2016. Rental prices have also fallen although the volume of deals since June's referendum has risen.

English houses
Figures from London estate agent Douglas & Gordon showed a sharp fall of 3.6 per cent in residential property prices for sale in prime areas between Notting Hill and Chelsea. Three- and four-bedroom houses experienced some of the sharpest price drops (down 4.3 and 3.8 per cent respectively), while one- and two-bed flats dropped far less."This gives owners who are looking to ‘trade up’ to a bigger property the opportunity to save on their new purchase," said the report. "Borrowers are also benefiting from the Bank of England’s decision to ease credit conditions, shortly after the ‘leave’ result in last month’s EU referendum, as banks have been given licence to lend more. With a cut in interest rates predicted next month, savvy buyers are resetting their sights to take advantage."CEO James Evans, Douglas & Gordon chief executive, added: “After two years of property uncertainty, we are now seeing very good conditions for home owners to trade up to larger properties. Overseas investors are already taking advantage of the weaker sterling against the US dollar post-referendum, and making the most of opportunities within the capital. However, our latest figures show that it is not just investors who can benefit from the current market conditions, and those who are looking to move into bigger properties, may be in for a welcome surprise.”

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In its report on prime sales, Knight Frank said: "Changes to the market over the past two years have meant that the Brexit vote has merely been a trigger for some to make overdue reductions to their asking price. It is too soon to say what impact Brexit will have on pricing but, in many cases, reductions reflect what would have been an appropriate price before the referendum."The report showed that annual price growth fell to minus 1.5 per cent in July even though the number of viewings in June was 17 per cent higher than the same month in 2015 with demand relatively strong in top-end areas such as Belgravia and Knightsbridge. On prime rents, Knight Frank said that while volumes of transactions had increased since the referendum, values had declined.Tim Hyatt, Head of Lettings at Knight Frank, said: “The current lettings market in prime central London is encouragingly stable. We saw a spike in new instructions in the aftermath of the referendum vote, although the number of new applicants registering is slightly down creating an imbalance of supply and demand. From a transaction perspective, the level of new deals has remained strong. In particular, the number of corporate enquiries was encouragingly positive as it was dramatically up on last year, highlighting that confidence in London as a capital city of choice remains strong. Due to the imbalance of supply and demand, landlords need to be realistic when it comes to pricing in an increasingly competitive market. This includes considering price reductions, however significant, in order to reflect value in the current climate.”

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