Its web hits from Bahrain increased by 211% month on month in March compared to February. In addition, there continues to be an extreme shortage of stock on both the sales and lettings markets with gazumping and best bids on prime stock.
‘With the recent instability in the Middle East and the tragic crisis in Japan, London appears to be a safe haven with the added attraction of low sterling exchange rates. As such, the Central London property market is attracting investment from all over the globe,’ said Richard Barber, partner, residential sales at W A Ellis.
‘This demand for property has led to an upsurge in prices and transactions (which has also partly been fuelled by the increase in Stamp Duty Land Tax which increases by 1% on properties valued in excess of £1 million on 05 April) over the last month,’ he explained.
The firm reports that 25 houses in excess of £2 million have been sold in the last three weeks alone within SW1, SW3, SW7 and SW10, and prices have increased by approximately 3 % since the start of the year.
‘We have also witnessed a number of instances of properties going to best bids and in many cases, there are three or four purchasers for each property. The acute shortage of quality stock within our area of operation is becoming more apparent with agents pitching at recklessly optimistic prices to encourage reluctant vendors to the market,’ said Barber.
‘The increase in Stamp Duty Land Tax has obviously focused purchasers' minds and Spring has effectively come early with purchasers rushing to conclude transactions prior to the 05 April deadline. This does, however, beg the question, is this activity sustainable or will demand taper off as the incentive to conclude deals disappears?’ he explained.
‘There are two views, the first being that the severe lack of stock and worsening international situation will fuel demand and purchasers will simply have to pay the premiums which reluctant or discretionary sellers will demand. The converse view is that there will be a lull whilst prospective purchasers assess the market and consider the combined effects of the Middle Eastern and Japanese crises and the now punitive level of stamp duty. Some will choose to enter the rental market, although this area too is suffering from a lack of quality stock.
‘We believe that reality, as usual, sits somewhere between these two views and the market will continue on an upward path but at a less frantic rate. New vendors coming to the market in Spring will need to adopt a rational and informed attitude to pricing and not be influenced by the dinner party hype which seems to suggest that every property within a five mile radius of Piccadilly Circus will be snapped up by a Middle Eastern buyer keen to safeguard his wealth. Of course, this is not the case. Whilst we have seen an increase in Arab based applicants, they are discerning and only specific properties will meet their criteria,’ he added.
Lucy Morton, managing partner for residential lettings, said that the sector has just recorded its sixth consecutive quarter of growth with values continuing to increase. ‘Not only is there an increase in Middle Eastern tenants, but there are countless types of tenants eager to find a home, from the corporates coming in to London to British tenants needing to move for more space, a new location or for financial reasons and are unable to secure the right property to purchase,’ she explained.
