London Booms!

It seems that we, and other leading market commentators, might be correct in forecasting that the property market in Central London will be exceptionally strong during 2006.

Buying and selling activity in the first ten weeks of the year, whilst not unprecedented, could certainly be described by the most measured of us as being extremely strong indeed.

The Central London market is largely reliant on buyer's confidence. This year, a strong and stable economy, low interest rates, a strong stock market and large City bonuses are together responsible for the present activity.

The safe view, expressed by many, is that house prices will rise in 2006 by between 5% and 8%. These statistics may apply to the market as a whole, but early signs this year, based on actual transactions, would suggest much higher growth rates of between 10% and 15% for some of the best properties over £2m in London. Indeed, most properties we have sold in the first ten weeks of the year set new records for the streets in which they are located, with the vast majority of sales being agreed after competing buyers had pushed prices up. Many properties that remained unsold for a substantial part of last year, sold early in 2006, after sealed bids forced prices well above previously unobtainable asking prices. It could be said that the London market is now making up for the modest growth rates of the last three years.

Over recent years, the London market has proven to be more and more seasonal, with the majority of activity taking place from January through to July. We foresee that this year will be a good example of this seasonality, with the second half of the year bringing less activity than the first half.

London is, of course, no stranger to dramatic swings in activity, which almost always result in a long-term average growth rate of about 10%.

Lane Fox, 30.03.2006

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