‘Cheap’ money helps Londoners compete with international buyers

Miles Shipside, Rightmove director and housing market analyst comments: 

"This is the first time in five heady months that the average price of a property coming to market in the capital has fallen below half a million pounds. Would-be sellers of smarter London addresses have stayed off the market, distracted by the summer heatwave at home or elsewhere in the world. Fewer people choose to put their house on the market during the summer holiday season and those that were not willing or able to postpone marketing until the autumn appear to have priced their properties to sell quickly."

Sellers have yet to respond en masse to increased buyer demand, with the summer heatwave distracting homeowners from the recovering market and increased chances of finding a buyer and moving home. It shows that potential sellers are still cautious and a return to a volume market remains elusive. The weekly average of fresh property supply this September fell by 12% compared to August, the largest drop in new listing numbers of any region in the country.

Shipside adds: 

"The lack of fresh stock is likely to have repercussions next month. With a return to a more even mix of property coming to market we would expect an autumn price rebound as agents try to rebuild their stocks to meet demand".

The lack of activity in the more expensive boroughs has meant an average price fall of 2.7% in inner London this month. By comparison, prices have held up much better in the more active market in the outer London boroughs, resulting in a fall of just 0.3% this month. While cash-rich international buyers still favour inner London, they are also very active purchasers of buy-to-let investments in the outer London boroughs. Agents report a recent swing back to more London-based buyers in these cheaper and more affordable non-prime areas, as lower borrowing costs helps them better compete with international investors.

Shipside observes: 

"The Bank of England's Funding for Lending scheme is helping to provide Londoners with cheaper mortgage money, helping them to raise the funds to compete with international buyers. Sellers like a cash buyer, but a large deposit buyer with a smaller slice of borrowed funds is still an attractive bet, especially if they are now able to compete on price against overseas buyers". ightmove