Graham Norwood's June 2008 Market Review - Top end of London sales market firm, Lower turnover for many estate agents.

London’s property market remains a tale of two cities as summer arrives.

On the one hand the uber-top end appears unabated with, for example, steel magnate Lakshmi Mittal reportedly buying a Kensington Palace Gardens house for £117m. At £8,000 per square foot, it’s the world’s dearest home.

One newspaper says City boys have taken a record £12.6 billion in bonuses this year based on 2007 pre-credit crunch performances – history suggests a chunk of that will be spent on top-end bricks and mortar.

But as we slide down the price scale, so the market gets worse. A lot worse.

Prices in London have dipped little compared to elsewhere in the UK, although increasingly sellers have to slash up to 10% off their asking prices. But agents are most worried by the fall in transaction volumes. Most privately say that compared to 2007, sales are 40% down; some are cutting staff in response. Chard reports that even the rental sector is not benefitting as strongly as anticipated, given buyers’ difficulties getting mortgages. There are more mid-market flats and houses to let than a year ago, with the upturn limited to cheaper flats to let in prime areas of London.

The latest agent to announce redundancies is Savills – only 14 are going, but all are from the London new homes division, where sales have reportedly fallen 60%.

It’s going to get worse before it gets better. But no one knows how much worse.