MORTGAGE LENDERS RESTRICT DEMAND

admin — Thu, 17 Dec 2009 10:04:32 +0000

Prices edged up in the Midtown, City and Docklands housing markets in the second half of 2009, with an average rate of growth of 3%. Transaction levels remained relatively low, however, and the upward tick in prices had as much to do with the lack of stock for sale as any demand side factors. Given the absence of mortgage finance on reasonable terms, if there had been a bigger supply of property for sale it is possible that there would have been no increase in sales prices in 2009.

Taking a chronological view, July was the tail end of the unexpected boost to the market from equity-rich buyers that had started in March 2009. August is the summer holiday season and is traditionally quiet, but the normal September boost to sales transactions did not occur, although there was evidence of purchasers from the euro-zone buying apartments for family members at London universities. This led into a typically quieter 4th Quarter, with low levels of transactions and no further evidence of price increases. The impact of the interplay of supply and demand factors led to 6% increase in sales prices across Midtown, Bloomsbury property price and Docklands in 2009. The price of the illustrated average one-bedroom flat increased by £20,000 during
2009 from £318,000 to £338,000.

In a continuation of the trend in the first half of 2009, it remained the case in the second half that 70% of all transactions in our Midtown, City and Docklands offices were from 100% cash buyers. It was notable that there were fewer overseas buyers in the market in the second half of 2009, in spite of continued weakness of the pound against other currencies, especially the euro. The absence of mortgage finance from British banks available at reasonable terms is hugely influential to the sales markert.

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MORTGAGE LENDERS RESTRICT DEMAND