London buyers move in on lower prices and cheaper loans

Six months of stalemate in the London property market has been brought to an abrupt halt as Cluttons reports a substantial increase in buyer enquiries since the start of the year with many deals now being struck at 2006 prices – the last time transactions levels started to rise.

Deals are being struck in parts of the capital such as Clapham and Chelsea which have seen heavy price falls, as buyers are aware that even if prices slip back further, they are unlikely to get a better opportunity to borrow at the record low interest rates.

James Hyman, Partner for Residential Sales, comments: "We are having the busiest January in five years, with more than a 100% increase in enquiries since the beginning of the year and several sales agreed in the last two weeks alone. Buyers perceive that even if prices drop a bit further they won’t get a better opportunity to borrow at these record affordable rates.

“The risk element of property investment is beginning to be removed. Stock market values are down, banks are not offering any form of return and with rental values holding up in London, in many cases it is now once again becoming cheaper to buy than rent.”

The quality of buyers is also helping offers to be made and accepted much quicker. Many enquirers now have approved finance, nothing to sell and are looking to move in first quarter of 2009.

However, Hyman warns that the market is still extremely volatile and vendors who have been delaying selling their homes may still lack confidence to go to the market. “As stock that has been on the market for some months starts to sell, a shortage of supply must not lead agents to get carried away with valuations. The market is still extremely fragile.”

For more information, visit cluttons.com