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London's property market defies national slump

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30th Jan 12 11:25 am

London continues to buck the national trend of falling house prices thanks to the Olympic Games and its reputation as a “safe haven” among overseas buyers, according to a study.

The eurozone crisis has motivated a large number of overseas buyers to invest in the London property market to protect their wealth, while the Olympics is set to heighten interest in the capital’s houses, property analyst Hometrack’s study said.

Nationally, house prices have failed to record a monthly increase for a year-and-a-half, while the weak economy and pressure on household budgets are forecast to drive them down further still, the report said.

London was the only area in the country to experience an increase in house prices in January, with a 0.1 per cent rise in prices. Comparatively, property prices in the North East dropped by 0.4 per cent, the largest fall in the country.

The average house price across the country remained flat in January following a 0.2 per cent fall in both November and December, the survey of 1,500 agents and surveyors revealed.

Demand for properties in London is high and the average house is on the market for just 6.5 weeks, while sellers in the Midlands, the North and Wales must wait an average of three months to shift their property.

The comparatively strong London market “looks set to continue through 2012 as the Olympics firmly focus the eyes of the world on London, and overseas buyers, in the midst of global uncertainty, continue to consider London a safe haven,” the report said.

Hometrack director of research Richard Donnell said: “The latest Hometrack survey reveals a market dogged by uncertainty.

“On a national basis house prices have not increased over the last 18 months – a theme carried over into January when prices were unchanged.”

He continued: “London looks set to buck the national trend again in 2012 thanks to overseas buyers providing a boost to prices in London’s prime areas.”

Nationally, the year got off to a “slow start” in general. Agents reported that some 10.5 per cent fewer new buyers signed up in January compared to December, while 5.4 per cent fewer properties were listed and 14.3 per cent less sales were agreed.

The number of homes coming to market in England and Wales in the last six months has fallen by seven per cent, which is the steepest drop since 2009 and only a “modest” improvement in buyer demand is forecast for the coming months.

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