The small and ‘inelastic’ nature of housing supply in central London renders the market more susceptible to changes in values than other markets, although they will also be the first to recover says new research from Savills .
Current issues over job security in the City coupled with negative market sentiment are affecting values in London, and there has unquestionably been a rapid adjustment in house prices in the capital, the report states, adding that the downturn will be more prolonged than at the beginning of the year.
However, looking ahead, Savills also points out that history has shown whilst values in prime central London dip more profoundly in a poor market, they are also the first to recover, and recover strongly once conditions improve.
‘From 2010, assuming that the financial markets regain momentum and confidence returns to the property market, we expect values in prime central London to turn around and start rising again. This will then filter through to the prime regional markets.
‘We expect values in prime central London to rebound more than other prime or mainstream markets, recovering to 2007 levels by 2012,’ the report concludes.