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London's property market in 2010 - Camilla Dell, Black Brick Property Solutions

London's property market in 2010

Camilla Dell, Managing Partner of Black Brick Property Solutions, looks ahead to what we can expect in the London market in 2010.

‘With cautious optimism’ is the best way to describe how we are viewing the market at the moment here at Black Brick. Nobody predicted the rise in prices which we are experiencing right now, but as this is due largely to the lack of stock in the London property market, coupled with high numbers of buyers, it’s wise not to get too over excited. So what can we expect in 2010?

Will prices rise or fall?

This all depends on what happens to interest rates, mortgage availability and unemployment. In London, once interest rates start to go back up, it is likely we may see a large number of properties come onto the market, and this could put a stop to the recent price rises we have seen over the last few months. However, most experts predict it could be quite some time before we see interest rates rise. We do envisage that prices will continue to rise modestly in 2010 due to lack of supply, and continued demand from investors, funds and bonus money, but this will level out and the year will probably end largely flat.

Will demand increase or decrease?

Property markets tend to be led by emotions and at the moment, people are feeling a lot more confident than a year ago. There has been a wave of good news coming from the markets and people generally feel that the worst is now over. Bonuses are also due to be significant in the city for several financial institutions, and some of this money is bound to be spent on London property. At the same time, investors still seem to favour bricks and mortar over other forms of investments and its difficult to see demand easing over the next few months. We are also starting to see interest from the institutional market, with several property funds being set up recently, specifically to acquire residential property in Prime Central London.

What might cause further pain?

A sudden and significant rise in interest rates would cause havoc on the market. However this is an unlikely scenario. Continued rising unemployment and lack of mortgages for those without large deposits will halt any real recovery.

Should investors still buy?

We still maintain the view that owning a property in London, as part of an investor’s overall investment portfolio, is a sensible thing to do and good for diversification. Residential property is still a compelling asset class when compared to others, and whilst prices have risen, they still remain 18% below peak levels. Property is a safe and tangible asset. London continues to lead the way as the world’s centre for financial services, and continues to attract the globally wealthy. What the past 12 months have demonstrated is London’s resilience to major economic downturns. With tight planning restrictions and a deficit of 1 million homes forecast, investors are buying into a market that is set to remain competitive for some time to come.

Camilla Dell

Camilla is Managing Partner and Founder of London’s leading independent buying consultancy, Black Brick Property Solutions (www.black-brick.com). Founded in 2007, the company acts exclusively on behalf of buyers to help source and acquire the right property on the most favourable terms.

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