Property Know

There is currently a great amount of speculation in the London Property Market. Will it drop? Has it dropped? Is it dropping? In short the answer, is yes - certain parts of London have dropped in price, however Central London prices will hold strong.

Following up from a previous post “30 Year Low for Property Sales” talks about property sales in the UK dropping and that asking prices have had to been dropped. And we at the London Property Market side, completely agree.

We have always held to the opinion that the best place to invest is in Central London (places such as South Kensington, Queensway, Notting Hill Gate, Knights Bridge, Regents Park, St Johns Wood etc). If you look at that specific part of Central London, the prices have not changed much compared to the rest of the UK and Greater parts of London.

Why is that?

Lets look at the Supply and Demand, in Central London it is a known fact there is NO MORE LAND to build property on. So supply will pretty much or less stay the same, however demand will always increase (due to population growth, it is Central London where people want to live, Foreign Investment etc). So even if there is a dip in the local economy, there will be foreign investment to pump into the London Property Market. Demand will be increasing, and supply will stay the same - hence prices will increase! The hardest thing in buying in Central London is that the “barriers of entry” are extremely high. To get a decent 400-500 sq/ft 1 bedroom apartment, you will most likely be looking for a minimum of £375, 000 and go up to well the millions!

How about outside Central London?

The problem about outside Central London (mainly Zone 2 onwards) is that there is still Land to develop properties. Lets take Canary Wharf for example, which was a “boom” zone for buyers and investors. But if you look at the Canary Wharfs Property Market, owners are having problems to cover their mortgage payments and value of their properties are depreciating! And why is that? There is so much development that supply in Canary Wharf keeps on increasing - so it can meet demand. So prices are either stable or going to decrease due to Supply over lapping Demand. This is the current situation.

So just be very careful when you invest in property at the moment. The markets are soft in many areas in the UK, so you will have more chance of getting a good deal. In Central London, throw a bit more caution.

All the best!