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| FRIDAY 1ST APRIL 2005 |
 LONDON
HOUSE PRICES REBOUND
Selected areas of the London housing market have begun to rebound
sharply according to the March Hometrack survey. This follows
last month’s fall of -0.2%, and ends an eight-month period
of house price falls.
With price falls over the past five months reducing steadily,
the London market looks set to bounce back to positive price
rises this spring. House prices in London now stand at £262,400,
down from a peak of £275,900 in June 2004.
Activity has improved again this month, with an increase
of 19.8% in the number of sales agreed (40.1% in February’s
survey). Coupled with an increase in the number of buyers
registered of 6.4% (38.2% in February’s survey), this
suggests that the market is beginning to tighten. With more
buyers coming on to the market, they are finding it more
difficult to negotiate the discounts on asking price. Sales
price as a percentage of asking price has increased to 93%
(92.7% in February’s survey and 91.8% in January’s
survey).
The number of properties listed has also increased, by 7.3%
(-17.9% in February’s survey). With more properties
on the market, they are now only taking 6.1 weeks to sell
(6.4 weeks in February’s survey), suggesting that with
renewed buyer confidence, houses aren’t ‘sticking’ on
the market as long.
Out of the 32 London boroughs, 13 reported price increases,
5 remained static and 15 saw price falls. The best performing
boroughs were Harrow (1.6%), Camden (1.4%), Kensington & Chelsea
(0.9%), City of Westminster (0.6%) and Bromley (0.5%).
The worst performing boroughs were Lewisham (-1.2%), Southwark
(-1.1%), Hackney (-1.1%), Enfield (-0.9%) and Havering (-0.8%).
There are only four boroughs in London with properties (flats/maisonettes)
priced below the revised stamp duty threshold of £120,000.
These are Barking & Dagenham (£95,500), Havering
(£109,700), Bexley (£110,000) and Newham (£113,200).
John Wriglesworth, Hometrack’s housing economist,
comments: "The London market has been hit hard by house
price deflation over the past eight months, so this month’s
stability is good news for homeowners."
"The top end of the market seems to be bouncing back
particularly well, as Kensington & Chelsea and the City
of Westminster are in the top five. What’s more, detached
houses saw the highest price rises over the month."
"Activity in London has increased again this month,
suggesting that despite all the doom and gloom reported in
the press, buyers have not been deterred and are coming back
to the market. However, despite the Chancellor’s decision
to raise the stamp duty threshold, first time buyers are
still finding it increasingly difficult to get a first step
on the ladder in London, as the average cost of homes is
more than £140,000 over the £120,000 limit."
First time buyers can at best only look at modest flats.
Only four boroughs have average flats priced below £120,000,
these are Barking & Dagenham, Havering, Bexley and Newham.
"We expect prices to level off and then return to positive.
We have therefore adjusted our forecast from -5% to 0% for
2005."
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