Price growth in the most expensive property in London has fallen in the past quarter, as City confidence falls, and new buyers hold back in the face of a more uncertain market, according to Savills research.
Quarterly growth was just 3.2% in the third quarter of the year, the report found, compared to 9% in the first quarter. This is because some City buyers have withdrawn from the market temporarily in response to levels of financial uncertainty, which eases the tension between supply and demand for the best London properties.
Lucian Cook, Director of Savills Research said: ?The tempering of growth is a direct reaction to uncertainty in the City with purchasers and potential purchasers expressing more caution pending a clearer picture of future job security and bonus expectations.?
Savills now expects this caution to be a feature of the market for the remainder of 2007 and the first part of 2008, with minimal growth in values likely in the last quarter of this year. In light of this, they have decreased their annual growth forecast in PCL from 22% to 18%.
However, Mr Cook was adamant that any small fall in growth was not a precursor to any kind of crash: ?Any prediction of a house price crash is definitely unfounded at this stage as the fundamentals of the market are sound and no serious economic commentator is predicting the recessionary environment that would precipitate one. Despite continued supply/demand imbalances over the longer term, we do not believe that a return to the earlier extraordinary growth levels of this year is realistic.?
The report also concludes noting a trend: ?We have previously seen short-lived slowdowns in the market as a reaction to specific events in either the political or financial environment. This occurred in both 1998 and 2001 and we currently expect to see a similar pattern emerging to these short-lived shocks,? it states.