Gloomy outlook for prime London property market

Prime London sale values dropped by another 2% in August, according to data from primelocation.com.

This is the third consecutive monthly drop and now means that values are 5.37% lower than in May. The data also shows that prime London rental prices and prime country sales values have also fallen showing a gloomy outlook all round for the prime property market.

The latest data finds that, all prime London areas have experienced a monthly reduction in average prices and that annualised growth has reduced to 4.1% now at its lowest level since May 2006, following sales prices taking their third consecutive hit in August. The only regions showing positive growth were Westminster up 7.2% and Finsbury up 5.3%. Of the areas showing negative growth, City and Docklands has fared the best for the second month running, decreasing by a marginal 0.96% compared to a drop of over 2.2% in Balham, which was the worst performing area. Stock levels have increased further from last month and are now 46% higher than in August last year.

Until August, the prime country prices had been holding up despite the dismal market conditions seen elsewhere, but this month prices are down by 0.92%, the first fall this year. The good news is that properties on the market are valued at 3.35% higher than in August 2007, but compared with July 2008 when they were 5.6% higher, it is the lowest year on year growth seen so far in 2008.

While the majority of areas witnessed a fall in prices, the North and West Midlands saw growth. The North enjoyed its fifth consistent rise with a growth of 1%, whilst West Midlands and Wales saw a growth of 0.44%. The region which fared the worst in was the South West which saw prime prices fall by 2.1%.

The downward trend continues in the prime London lettings market with rental values dropping for the fifth consecutive month this time by 0.92%. The last few months have seen values decrease to their lowest since February 2004 with June dipping to a low of 2.58%. This is a direct result of large stock levels currently at an all time high up 85% on this time last year, which continue to hamper the market.

Mark Milner, CEO of Primelocation.com comments: “Values for residential property in prime Central London have now dropped for three consecutive months with prices down 5.37% from May. This is the largest quarterly fall recorded in the history of our index and has nearly wiped out the gains seen in 2008. This sustained downward trend is now mirroring what is being experienced in the mainstream market, which Halifax has just reported declined 10.9% since August 2007. Stock levels continue to soar and are now 46% higher than this time last year. The situation is unlikely to change until the mortgage market eases and the economic outlook improves.

For the first time this year, prime country sales have fallen month on month following seven months of price rises. This could be the start of a more sustained downturn for the market which until now has been exempt from the current housing crisis. The north is proving the most resilient and is the only region to show positive growth this month.

Weekly prime rental values have dropped for the fifth successive month by over 0.92% and substantial amounts of stock continue to come onto the market and remain empty. This is a direct result of reluctant landlords who are experiencing problems selling properties turning to the rental market – which is putting pressure on prices.”

For further information visit primelocation.com