London Property Market Review - Graham Norwood

There’s no denying tougher times are here in the property sales market but in London the pain is mainly in the new-build market.

Data from Hometrack and the Land Registry both show only minor price dips in prices for second hand house and apartment sales across Greater London. And top-end estate agents say homes in prestigious central London – roughly those areas covered by Chard’s offices – still show gentle price increases, against the odds.

Yet the new-build market is very different.

The National House Building Council represents builders constructing 85% of homes in London and says the completion rate in quarter one of 2008 is 25% down on the previous quarter, and 642 homes down on quarter one of 2007. As a result over 100 London developments now have incentives including ‘deposit guarantees’ where instead of delivering a 10% deposit, buyers pay a smaller premium on an insurance-backed bond. It guarantees to reimburse the developer if the buyer is denied credit – a real sign of the times.

This highlights the real problem affecting the London market. It isn’t the prices, as these have not tumbled heavily. The big worry is the collapse in demand.

With London buyers unlikely to be influenced by summer falls in interest rates, what will get them back on their feet and in estate agents’, and especially, new build developers' offices again?