Unfortunately they are predicting a fall in property prices in 2009 of 10% with a flatening off period in 2010 and a return to growth in 201
Cluttons believes strong demand from international purchasers and a more limited supply of residential property, with a larger demand than expected, given the loss of wealth and jobs in the capital, have led to this moderation in the overall fall in values.
The latest Residential Property Forecast (May 2009) predicts price rises of 6% in 2011 and 10% in 2012. Strong demand and London's restricted potential for property development will remain key drivers for growth, along with the Capital's fundamental strength as a global financial centre.
James Hyman, partner for residential sales at Cluttons, says: "The current shortage of property for sale is already impacting the Central London market and the rate of house price falls is slowing. I am confident we will see a stabilization of the market next year, followed by a strong return to positive growth in 2011.
"London remains in the grip of a sharp recession, but its position as one the world's principal business centers will underpin the city's recovery. London is still the city of choice for leading businesses and consequently demand to own property here will remain strong in the long run.
"The market will also continue to benefit from the improved affordability for foreign buyers, given the sharp fall in sterling versus most major currencies."
Cluttons predicts the wider UK market will see the pace of price falls moderating over the remainder of this year, with prices bottoming out in the third quarter of 2010. Further deterioration in the economic outlook will outweigh the positive effect of recent increases in market activity.
As much as we have to respect the opinion of Cluttons I do hope that on this occasion that they have got it wrong. I had hoped that the residential market would bottom out by the end of this year and by next march / april time we would start to see signs of returning to a positive position after bouncing along the bottom for a bit. That would mean that the commercial market would bottom out by the end of 2010 and we would start to see some growth by 2011.
This may of course be wishful thing but the demand for property is there but it will take the lenders to start lending again first in the residential sectors and then commercial mortgages, finance, and business loans to allow the market to return to anything like a normal market, somebody up there has to take the brakes off and let the market find its own level, lets hope that commonsense and due diligence will take some of the lending madness away, and lending is about helping clients, not a massive lever to earn large bonuses on the back of lending that cannot be sustained.
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