Central London Property Market Forecast 2011 Written by Andrew Ellinas Monday, 20 December 2010
Central London Property Market Forecast 2011

In 2011, the prime central London property market will again buck the national trend and remain stable.

The top end of the London market has become a free-floating entity, separate from the general UK property market and operating under different rules.  In the UK’s regional markets (including non-prime London) property prices reflect the local economy because almost all house buyers live and work in the area, and most experts expect declining property values in the next year.  However, buyers of prime property in central London are the world’s super-rich, and their buying patterns are influenced by international financial events rather than regional trends.  And at the global scale, the outlook is much brighter.

London’s position as a world city attracts wealthy buyers.  The vibrant cultural life with its universally envied theatre, music and visual art scenes make it the top location for at least one of their homes.  The stable political and economic environment make London a top choice for investors, and this has been underlined recently by movements in the currency market that have benefited people repatriating capital gains made in sterling against many other currencies.  The economic travails of the Eurozone have persuaded many high net worth individuals to transfer funds outside it, and London has benefited accordingly.

In the near future, the outlook for the stock market is good and a booming stock market inevitably boosts the prime central London market. The buoyant financial sector is also providing a steady stream of enquirers in Sandfords offices looking for imposing family homes within a convenient distance of the City and Canary Wharf, although the controversial government proposals to rein in City bonuses may throttle this demand off slightly.

Finally, in this rarified market, buyers do not in general need finance so interest rate fluctuations have little impact. But the current historically low rates make borrowing practically free for those with substantial resources, and some buyers are being tempted to finance property purchases simply because they can borrow money so cheaply.

For all these reasons, demand in the prime central London market is high, and the other side of that inviolable economic law, demand, is severely restricted at present.

Because so many properties are owned by extremely wealthy individuals and families, they have no absolute need to sell.  Presented with what they regard as unacceptable offers, they simply hang on until the economic climate improves.  The result has been a severe shortage of stock, especially in Marylebone and Regent’s Park.

Over 2011 we do not expect this situation to change significantly, whatever might happen in the UK property market in general. In our opinion, prices in prime central London will remain stable.

 

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