Assetz® News - London catch-up still has some way to go

London catch-up still has some way to go

18th August 2008 |

Those studying trends in the property market will have noticed that house prices are falling across the country (except for Scotland), causing concern to sellers but bringing hope to buyers. But a closer study has revealed many variations in adjacent areas.

A clear example of this is now occurring in London and the south-east. The Financial Times has revealed that estate agents all around that corner of the country have seen an interesting switch in the extent to which each of the two regions has adjusted to the general downward trend.

The Paper noted that Marc Goldberg, head of estate agency Hamptons, had observed an initial trend where London prices dropped faster than in the south-east, where sellers tried to maintain unrealistic house price expectations, being "unwilling to accept the economic realities".

Mr Goldberg added that this trend had now reversed, with London trailing behind and making the Home Counties comparably much more affordable. Also making this point to the Financial Times was Liam Bailey, spokesperson for Knight Frank. He stated: "Pricing in London has held up better than elsewhere and those who cannot afford to buy in the capital are moving to take advantage of falling prices elsewhere."

This difference can be quite substantial, the report adds. Those who are disgusted with Islington prices can find them for £150,000 cheaper in Tunbridge Wells, while Guildford is also emerging as a popular location.

While this may help buyers who can either live near their London workplaces or commute in from the capital's hinterland, those investing in buy-to-let may be at an advantage. While London properties remain more expensive the rental option for those who cannot conveniently move out of the capital may be all the more enticing. Affordable rent will, as ever, have an appeal for those who cannot afford to buy.

The key is that the evidence for the disparity between the regions is not just about anecdotes from estate agents. The latest Rightmove Survey has revealed that London prices fell 5.3 per cent - or £21,000 per average property - last month. Commercial director of the firm Miles Shipside called this London's "special summer sale", but the figures for the last year show that the drop in prices in the capital has been 3.8 per cent, compared with 4.8 per cent elsewhere.

While this may be better news for sellers and an indication of a price resilience that will lead to higher increases when the market cycle turns, for now it makes the south-east more attractive to buyers.

These figures also tally with the June findings of the Land Registry, showing that while London saw a 2.5 per cent drop in process compared with 0.4 per cent for the south-east, the metropolis has still seen 2.4 per cent inflation in this survey, compared with 1.3 per cent for its neighbour.

So while London may indeed be having a little sale, it remains the most expensive store around for now, one in which such costs may continue to make hiring rather than buying the option of choice for many.

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