The latest statistics published by the land registry show what could be the first signs of cooling in the property market. A drop of 0.7% in property prices in London was reported for the month of September however the annual price increase remains strong at 18.4%. The September price movements are also confirmed by Nationwide which subsequently reported an increase of 0.5% in October, suggesting that the September correction may be short lived.
Historically (past 40 years) the average annual increase in property prices in prime central London has been around 11%. We expect this average to be maintained in the long term, making it reasonable to expect less aggressive growth going forward when compared to the past 12-15 months.
Next year’s UK national elections (May 7th) may make the timing and extent of these property price movements more unpredictable. Uncertainty tends to effect property and financial markets, at least in the short term but typically, markets and investors price-in such events ahead of time. For this reason, the coming months could prove to be a good buying opportunity for long term investors.
Real Estate Advisory
Autumn Cool
31st October 2014
