Though the latest data from the RICS cites an increase in the overall number of property stock per surveyor in the UK market, here at Garrington London we continue to witness low volumes of quality stock and high purchaser demand, which is as high, if not higher, than it ever has been and supply is struggling to keep up in many parts of the capital. During the spring market, under normal market conditions, we would have expected to see a noticeable increase in quality properties entering the market, but this year new stock has been limited and with rising purchaser demand, competition for the finest homes in London’s most desirable postcodes is rising.
The increased demand can be partly attributed to an improvement in the availability and number of mortgages approved, leading to an increased number of buyers. London also continues to benefit from global wealth, especially in the prime sector of the market, and demand from international buyers is becoming the norm rather than a passing trend.
Whilst house prices in most parts of the UK are stagnating or in some cases falling, the current supply-demand ratio in London is pushing up house prices, with a 1.4% increase recorded in May for the London prime market, and has led to an increase in competition for on-market prime properties. This heightened competition means that quality homes are selling fast and often for inflated prices.
One recent example of this phenomenon is an Islington property we recently previewed off-market, and whilst it did not meet our client’s requirements, we monitored the property with keen interest. When the property was officially released to the open market there were over 35 viewings, the property was sold within one week, and the final price paid, once the bidding process was concluded, was over 15% higher than the asking price. For London’s best homes this is happening increasingly, although we challenge how sustainable this trend will be in the medium term.
However, in the short term given the above market dynamics, London’s ‘safe haven’ status, the 2012 Olympics, continued geo political and economic volatility and its global appeal, it is hard to see why the story would not remain the same in London for some time. Accordingly, buyers will increasingly need to be decisive, well prepared and advised in order to secure the property they want for a price that represents fair market value.