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London Property Market 04 September 2014

London Prime Residential Sales Report - Summer 2014

The prime London residential sales market appears to be reaching a plateau

Nick Barnes, Head of Research

Report Highlights

  • Q2 saw a marked change in buyer sentiment – more cautious and price sensitive
  • Prime capital values softened by 0.5% in Q2
  • Sterling appreciation continues to hurt overseas buyers
  • Prime London residential property has delivered stronger growth than other major asset types since the global crash
  • Next year's General Election threatens to exert a significant impact on the prime market

The prime London residential sales market appears to be reaching a plateau with the second quarter marking a distinct change in attitude on the part of both buyers and vendors. Many buyers became noticeably more nervous about pricing both in terms of the sustainability of recent growth rates and with regard to value for money.

Moreover, the mortgage lending environment has become more difficult as a result of the introduction of MMR, although the impact in London has been diluted to some extent by the high proportion of cash purchases which is running at over one third of all sales.

Furthermore, Bank of England Governor Mark Carney's pronouncements about an earlier than anticipated rise in Bank Rate and the new powers granted to the Financial Policy Committee at the Bank to limit high loan to income mortgages have done little to instil confidence about the shorter term future.