Buyers bid higher as London market intensifies

The gap between offers made and asking prices in the central London property market is closing fast, highlighting the intense competition amongst buyers, according to estate agent Marsh & Parsons.

In January 2009, the average offer submitted was 8.7% below the asking price for the property. But, in July 2009, the difference between the two narrowed to just 3.9%, having been closing throughout the year.

Peter Rollings, managing director of Marsh & Parsons, commented: “In the London market, there’s no shortage of buyers with large deposits looking to take advantage of prices that are 20% lower than a year ago in some parts of the capital. Added to that, a chronic shortage of properties for sale has intensified competition amongst buyers. The result is rising asking prices – and offers to match. “

He added: “We’ve seen a considerable number of properties go to best and final offers in recent weeks. Buyers simply don’t have the same power to negotiate as they did at the start of the year – and those who aren’t prepared to come closer to sellers’ expectations will almost certainly miss out.”

Average house prices in London fell 16.8% from their peak in January 2008, when they stood at £355,966, to the trough in May 2009 (£296,043). This was in line with the 17% fall nationally over the same period, but unlike other parts of the country, house prices are bouncing back strongest in London. In June 2009, house prices rose 2% in the capital, compared to 0.1% for all regions combined.

Transaction levels in London have improved since the start of 2009, but remain historically low. In April 2009 (latest data available), there were 3,888 sales in London, a quarter (26%) higher than in January 2009 but 76% lower than at the market peak in August 2007.

Peter Rollings said: “London house prices have rebounded faster than anyone expected, but the momentum is likely to slow. The threat of unemployment refuses to go away and, as transactions grow and the shortage of supply starts to ease in the autumn, we can expect a more modest rate of house price growth for the remainder of the year.”