The first half of 2006 has been exceptionally buoyant for the property market in London, said Hamptons International in their mid-year property market predictions. Record levels of buyers registered throughout their network and this has in turn led to an unprecedented number of transactions being agreed.

The supply of new properties coming up for sale has not been high enough to replace those properties sold or to satisfy such strong demand. Consequently prices have jumped by up to 20% since last October.

"Post the summer break we may find that the number of properties coming to the market will rise, although not substantially. That, coupled with other economic pressures and the fact that the market has already risen between 10 and 20% so far this year, we will see a slowdown in sales numbers and unlikely further rises of properties coming to the market," said Sara Graybow, sales director for Central and South London.

Due to recent turbulence in the stock market and an upward pressure on interest rates Hamptons anticipate that the second half of 2006 will see the market settle down with more property coming onto the market and demand returning to more normal levels. It is likely that prices for the remainder of the year will edge up by around 5% and that transaction levels will remain healthy.

Giles Soutry, sales director for Surrey and Kent said: "Looking forward there is still potential for prices to rise a little further due to the persistent demand from potential buyers out-stripping supply."

"With the first 5 months of 2006 behind us, we have seen a record number of sales being agreed in the East Berkshire, Kent, Surrey and Sussex areas with an uplift of almost 40% in agreed business, a continuing increase of 35% in new registrations and an increase of approximately 8% in prices over the last 5 months."

 "The demand, which at the start of the year was most noticeable at the top end of the market, has now spread to all price sectors. This is even against the backdrop of the removal of longer term fixed rate mortgage deals by the majority of lenders based on a possible rise in interest rates. Furthermore with some wild swings returning to the financial markets, we are likely to see a further increase in the number of investment buyers taking a long term view of property being a sound and safe bet, especially against a back drop of a stable rental sector, again underpinned by strong demand."  

 "Certainly until the start of the holiday season it is unlikely that there will be much change in this healthy market which is now a little ahead in terms of price from where it fell from 18 months to two years ago and the country regions around London are enjoying the benefits of the seasonal exodus of young families out of London looking for good family homes. The autumn will be less easy to predict due to the impending arrival of HIPS and the impact of the continued concerns of the impact on higher inflation caused by rising energy prices and the knock on effects to interest rates in the medium term."

"However, there is no overriding reason to say that the market is overheated and will need to see a major realignment downwards, because even off the back of pent-up demand buyers remain price conscious in most cases."

Avery similar picture for the future is seen elsewhere in Hamptons’ regions. Ursula Sadler, sales director for the Western Region said: "Demand for rental property in our country branches is relatively strong and the recent volatility in the stock market is likely to encourage investor buyers seeking long-term returns back into the market place. Indeed many of those investor buyers are purchasing property now with a view to retiring to the West Country in future years."

"As from June 2007 vendors will be required to prepare a Home Information Pack prior to offering their property onto the market for sale and there is a likelihood that towards the end of 2006 there may be an increase in available property stock created by those vendors wishing to avoid the cost and implications of this legislation."

Ian Westerling, sales director for the Thames and Chilterns Region said: "The current applicant trends suggest that we could well have the type of market which will remain active throughout the holiday season and into the autumn market."

"Potential interest rate rises and some scaremongering in the press will cause a dent in confidence, but the market over the past year has been very robust so I do not foresee the market stalling to any significant degree this year."

Stephen Tarrant, sales director for Surrey, Sussex and Hampshire said: "For the second half of the year, we are sure that a normal healthy market will continue following the seasons. That means the market will remain busy until mid July, quieting down for the holiday-dominated month of August."

"However traditionally the autumn market has reflected the spring market, although not quite at the same intensity. Hence if you are intending to move house and the timings have not been quite right this spring, then September looks like it will be an attractive time to proceed."

"There is no doubt that house prices have risen this spring and this will be shown in the land registry figures in July, August and September, however as in previous years the rate of house price inflation will tale off as the year progresses."