The high end property market of London, the driving force behind the city’s continually rising real estate prices, has begun to falter as prices suffered the first quarterly decline since 2003. According to news in several media, including the Times Online, the price of prime property fell by 2% over the last quarter of 2007. This information comes from several real estate agents including Savills. Prime property is that valued at more than £1 million.
Despite the decline over the last quarter, prime London properties still had a good year with several areas up well in the double digits. The price of Central London’s prime properties rose 16.3% for the year, although for the quarter the vales fell by 1.3%. Savills looks for the Central London market to rebound and increase by 5% in 2008.
Knight Frank expects prime property in the capital will outperform the rest of the London market as it has done in recent years. The firm expects the overall London market to grow by only 3% for 2008.
With confidence suffering across the market, year-end bonus cash might not go into the new homes that it has in past years, and buy-to-let investors have been particularly wary. Savills’ research director Lucian Cook notes that “The market has been influenced by City bonus expectations and the outlook for job security in the financial sector.” He did continue to say that prices are actually doing better than expected, given the financial situation overall. “We anticipated a fall of 3% in the final quarter of the year, in expectation that the market would react in a similar manner to previous financial shocks.”
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