2010 A LOW DEMAND, LOW SUPPLY MARKET
In the sales market in the second half of 2010 there was a reduction in demand across all buyer segments for Midtown, City and Docklands fitzrovia residential property. This led to a reversal in the price growth evident in the first half of 2010, with an average fall across the entire market of 2%. There was a spectrum of pricing changes however from west to east, with no change in prices in Midtown, a 2% reduction in the City and a deeper 4% fall in Docklands.
During the period of rising prices, the growth in enquiries came from the following four buyer segments, but in each case the level of interest was reduced in the second half as follows:
• First-time buyers, already under pressure to find very large deposits retreated in the face of falling confidence levels.list of new homes in london
• “Frustrated renters” already present in the market also faced difficulties with loan finance and with evidence of weakening prices many decided to delay potential purchase in the hope of further price reductions.
• Pied-a-terre purchasers, although at a lower level in line with market activity, were the main source of sales across all three sub-markets.
• Overseas buyers of investment property continued to be a feature of the market but at a lower rate than in the first half of 2010, with exhibitions converting a lower proportion of units into sales.
Pied-a-terre and overseas purchasers were driven by equity, giving these categories a distinct advantage over mortgage-dependent buyers.
Taking a chronological view, enquiry levels were reduced in July as the market absorbed the provisions of the Emergency Budget, including the changes to the benefits system, income tax, the raising of capital gains tax for higher rate taxpayers to 28% and the commitment that the VAT rate would rise from 17.5% to 20% on 4th January 2011. August was quieter than normal and then the hoped-for bounce back in September did not materialise. Overseas
property exhibitions had a lower success rate than in the spring, while domestic buyers sat on their hands encouraged by continuing media coverage of the likely content of the CSR.