The latest data from haart estate agents reveals that the average price of London property fell by 2% during November. This follows a three-month period of stabilisation across the capital and indicates a readjustment in prices. The average London house price for November was £226,167, down from a peak of £233,415 in July this year.

This process of stabilisation is reflected in the change in the amount that Londoners were prepared to reduce their asking prices by to sell their homes. Following the steady price growth for the first half of the year, reductions peaked in June, when sellers were dropping their asking prices by an average of 6.2% achieve a sale. By November, average reductions had fallen to 3.3% indicating that properties are now at market clearing levels and more in line with the prices that buyers are prepared to pay.

First-time buyers test the waters

The reduction in house prices has buoyed London’s first time-buyers who increased their share of the market by 1% in November as affordability improved.
 

However, price increases in the first half of the year hit first-time buyers hardest, particularly in London. At the start of the year, 27% of London buyers were buying property for the first time; by August this level had fallen to 18% where it remained for three months, confirming the stabilisation of the market.

Russell Jervis, managing director of haart estate agents said: “For the past few weeks we have seen a lot of first-time sellers on the market in London. These people are very keen to get moving but first-time buyers were being very cautious."

"Although these are only one month’s figures, November’s improvement in affordability looks to have given London’s first-time buyers a bit more confidence as they sneak back into the market and test the waters.”

Bargain hunters

haart saw a 5% increase in applicant levels in November compared with October across London as some buyers started to take advantage of falling prices.

Russell Jervis explains, “Canny buyers are looking for value. With the fall in prices and sellers experiencing less viewings, now could be a good time to buy, before the market’s annual up-lift in early spring.”

2005: Stabilisation and renewed enthusiasm

Commenting on the prospects for the London market over the coming year, Russell Jervis said: “We expect the market to continue to stabilise for the first few weeks of 2005 and then the renewed enthusiasm which we’re already starting to see should take hold in the second half of the year."

"Property remains a solid investment and renting continues to be more expensive than borrowing. Our forecast for 2005 is that house prices will rise by 3-5%, although we expect growth to be at the lower end of this scale.”