Assetz® News - New year brings renewed activity in the City

New year brings renewed activity in the City

13th February 2006 |

Having recovered from the usual trials and tribulations of the festive period, it seems there was a collective decision to return to the property market in London, with prices for City apartments shooting up in January.

London estate agency Felicity J Lord has said that prices increased by an average of 0.7 per cent in the month in areas including Canary Wharf, Shad Thames, Wapping and Bow.

All are areas that are set for more substantial growth in the next few years, with the Olympics in 2012 expected to add value to both residential and commercial property.

The prospective redevelopment of east London has already drawn a huge number of investors and as the final plans are announced in the next year or so, more are expected to look to the area for potential gains.

Felicity J Lord found that the number of transactions in the area climbed by 19 per cent in January, with the payment of City bonuses already adding impetus to the property investment sector.

A report from the Centre for Economics and Business Research (CEBR) suggested that £7.5 billion would be paid out in bonuses this year, with half of this being pumped directly into property. The affects of this are likely to be staggered but it will keep the market ticking over in the coming months.

"January is usually a busy time of the year for us," said Darren Box, managing director of Felicity J Lord.

"Once the Christmas period is over, we often see a surge of interest as buyers who put off the search in December come back to the market with a vengeance," he added.

The primary manifestation of this is the sudden rise in activity, with the average time taken to sell a flat falling from 54 days to 50 days in January. Felicity J Lord has pointed out that this reflects the general rise in confidence in January, with buyers becoming "less price sensitive". It is a phrase that is perhaps most applicable to first-time buyers and several recent reports have suggested that young individuals and couples are now returning to the market after a period of enforced or voluntary retreat.

With even first-time buyers happy to pay a figure approaching the asking price at the moment, the average reduction in selling price fell in January and this is a key indicator of overall confidence levels.

"As expected, the pick up in demand in January has acted as a support to prices across the City. As incomes continue to rise and City workers invest their bonuses in property, all factors indicate that London is heading for a revival," said Mr Box.

"As such, I continue to forecast a rise across the City of as much as five per cent in the first half of 2006," he added.

As is often the case, the health of the London property market is expected to trigger corresponding improvements elsewhere, although areas such as the north-west are already leading the way in terms of house price increases. Nonetheless, City bonuses are often thrown into properties outside of London and there is usually a ripple effect which eventually permeates most regions.