Tales from the Front Line

Prime London Update

by Roarie Scarisbrick
on June 30, 2010 in London Property

The summer of 2007 is generally viewed as the peak of the UK property market, but the reality is that the very top end of London's prime markets appeared to be invincible for another year, and thrived throughout 2008, until Lehman finally burst that bubble. 

The post-Lehman fallout was dramatic, and the market stopped dead in its tracks. We were negotiating on an exceptional house at the time and backed-off when the news broke. When we returned to the negotiating table three weeks later, we were talking about figures almost 50% less than previously. Indeed, it is fair to say that in the six months following Lehman, the very top end of the market was hit worse in percentage terms than the wider market, although there were too few transactions to crystallise the fall.

There were less than a handful of transactions in the first half of 2009, and even heavily discounted asking prices (sometimes to 30% - 40% from peak levels) could not revive the market in the first half of the year. However, the market did gain momentum towards the summer, due to growing confidence and continually contracting supply of stock, pushing values up by 20% (again based on very few transactions). 

The real activity in the market has been from January of this year. There have been between 15 and 20 house transactions in London so far this year at over £20m, against less than five in Jan - June 2009. A significant portion of the activity has been in North London, which accounts for around half of this year's biggest transactions.

Some of the big sales have been well publicised, including the large house on Eaton Square, which sold to Chinese investors at just over £30m, as well as the Royal College of GPs on Princes Gate which sold, again to Chinese investors, for £34m. In North London, a 12,000 sq ft house in NW3 has sold recently to a Russian family for over £40m. Indeed, the demographics of buyers are broader than ever, with Russians, Chinese, Middle Eastern, Scandinavian and even old-fashioned English buyers battling it out for the precious few houses available and sending values in excess of peak levels once again.

Property, Vision, Roarie, Scarisbrick, London, market, prime, transactions, sale, buyer, buyers, houses