The worst is over for house prices in London, says a study from estate agents Marsh & Parsons in central and west London. Prices have fallen already by up to a quarter over the last year and Marsh & Parsons expects them to continue to slip in the first half of 2009 – but at a slower rate.
The agency is predicting a peak to trough fall in house prices of 30% in the capital. Prices have dropped significantly to date and buyers are back in the market.
‘London was first in for the downturn and it will lead the way out. We have already seen the worst of impact of the credit crunch on London’s property market. It’s not going to recover immediately, but I’m confident we’re near the floor with each week bringing more buyers back into the market,’ says managing director of Marsh & Parsons, Peter Rollings.
He believes that to stoke recovery, the government must work with lenders to make mortgages available to buyers.
‘We know there are people out there who want to purchase their first home, or move house, but the lack of mortgage finance is still debilitating.’
The deteriorating health of the market at the end of last year encouraged large numbers of people to rent, rather than buy, while the market stabilised. Tenants registering with Marsh & Parsons were up by more than half in the first nine months of 2008 compared to the previous year.
But those renting in 2008 will come to the end of their one-year tenancies in the early months of 2009. Marsh & Parson suggests that people wishing to invest in a home or buy-to-let for the mid to long term, next year presents an opportunity to buy at, or very near, the bottom, maximising potential capital growth.
Mr Rollings already is seeing the number of buyer registrations rise, up by more than 30% in the last month as ‘intermittent’ renters think about re-entering the sales market.
‘I’m expecting to see a large influx of potential buyers in the first half of 2009, which will help balance the supply/demand equation, in turn stabilising property prices.’
The number of homes changing hands should improve too next year, points out the study. As the government’s bailout package begins to filter through, liquidity should start to reappear in the housing and mortgage markets. Although lending criteria will be stricter than at the height of 2007, mortgages should be more plentiful, adds Mr Rollings.