Property prices remain static in London

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by Kay Murchie

According to Jones Lang LaSalle, London house prices have remained static during the first 3 months of 2008 and follows a fall of 2% during the last 3 months of 2007.

The company said the annual rate of growth is currently 26.5% but the company expects this to fall quite significantly as the very strong quarterly increases of 13-14% in quarter 2 and quarter 3 of 2007 fall out of the annual calculations.

The average quality-adjusted price for a prime new home in London stayed at around £11,550 per sq m (£1,073 per sq ft), down from its £11,780 peak at the end of quarter 3 2007.

Property prices across the remainder of the UK have experienced falls during the first quarter of 2008, as reported by Nationwide. In London, average prices fell by 2.3% and by 2.5% in the UK with annual price growth easing to 5.6% and 2.2% respectively.

JLL said a further indication of the resilience of the prime central London market is that none of the schemes analysed in our index in the first three months of the year has needed to offer the kinds of incentives seen for less prime product and in other parts of the country.

Elsewhere, incentives have been quite considerable and have included, full value part exchange, £500 a month towards a mortgage for two years, mortgage paid until January 2009, half a mortgage paid for two years, deposit paid, stamp duty paid and the opportunity to own 100% of a home for 75% of the price, according to JLL.

However, prime central London is still being hit by the fall-out from the credit crisis so the level of concessions has been considerably lower.

JLL believe the reasons behind the resilience in prime central London are that there are a greater proportion of international rather than domestic buyers.

Furthermore, the personal wealth of these buyers from abroad means that they are both less affected by the affordability constraints of the more typical UK buyer and are less likely to be negatively impacted by the higher rates and reduced availability of domestic mortgage finance, concluded JLL.