The prime London property market bucked the trend of the mainstream market at the start of 2008, producing solid, albeit slower, monthly growth in asking prices. However, the latest data for April suggests that the prime London property market may be finally starting to go the way of the mainstream market, with average asking prices falling for the first time in 2008, down 0.6% since March.
The slower monthly growth witnessed at the start of the year has had a significant impact on annualised growth rates, which have now diminished to 11.7% in April, the slowest rate of annual growth since September 2006. The prime property market has, until now, been better protected against the variables that have already impacted the mainstream market, as there is generally less reliance on mortgage borrowing to fund purchases at the very top end of the market.
However, with one in three mortgage products being withdrawn from the market, the mid-market territory is starting to feel the squeeze, with many would-be buyers choosing not to buy in the current climate. According to the Bank of England, mortgage approvals hit a record low in March, at 64,000, down from 72,000 in the previous month.
Mark Milner, CEO of Primelocation.com, comments, "Asking prices in prime London have shown some resilience throughout the start of 2008, with cash-rich buyers at the very top-end keeping average prices buoyant. More recently, the reluctance of sellers to reduce asking prices in a difficult market, coupled with buyers holding out for further price falls before transacting, has led to something of a stand-off. Increasingly, sellers are being urged by agents to be more realistic in order to achieve a sale, but there is little widespread evidence to suggest that this advice is being widely embraced. May data will be crucial in determining whether the April fall in prime London asking prices is the start of a sustained downward trend that reflects the mainstream market, or merely a temporary monthly blip".
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