The divergence between the prime London market and the mainstream sector continues to grow. All of the publicity in recent times has been concentrated on the mainstream market. The impact of the credit crunch continues to be felt, particularly around mortgages, with some lenders withdrawing products for buyers with smaller deposits and others withdrawing new mortgage lending altogether.
As a result, mortgage approvals in February were some 39% lower than in the same period last year, forcing many potential buyers out of the market and slowing activity considerably. In the meantime, asking prices across the prime markets (where buyers tend to be less reliant on mortgages) keep on rising. Prime London asking prices hit new heights in March, up a further 3.3%, surpassing £1.3 million for the first time. All regions have witnessed solid growth in asking prices, with Central London the strongest performer.
The recent rises in prime London asking prices are set against the backdrop of falling stock levels across all regions since the start of 2008. The volume of property for sale has diminished by 11.5% since January, while in March alone, the stock of available property for sale has fallen by 3.7% from February levels. The continuing restriction of supply is helping to keep prices buoyant, while demand from international buyers and City bonus recipients continues to drive interest in the very best properties in the capital.
Ian Springett of Primelocation.com comments, "Despite slowing transaction volumes and weakening market sentiment, the prime London property market continues to produce strong price growth in March. Indeed, the prime markets are showing some resilience in the face of economic uncertainty and the continuing impact of the credit crunch. The increasing divergence between the prime and mainstream sectors reflects the different market forces at play across each area. While the mainstream property market has undoubtedly suffered at the hands of the recent mortgage clampdown, the prime London property market continues to enjoy significant attention from cash-rich, wealthy overseas buyers and the influx of City bonus money, particularly at the top-end (the super-prime market), where demand is the most intense relative to limited supply".
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