SIGNS OF LIFE ON THE LONDON PROPERTY MARKET

Spring is definitely in the air in London, not just because of the unseasonly sunny weather, but due to the surprisingly positive property market news recently reported from leading UK institutions such as the Nationwide Building Society. “This unexpected good news, together with the weak pound, significantly reducedprices and high yields, means that this is good time to consider investing in the London property market,” reports Anita Mehra, Managing Director of London-based Benham and Reeves Residential Lettings.

So what are UK institutions saying about the current UK property market? Well, the Nationwide Building Society recently reported a 0.9% increase in monthly house prices in March, the first rise in 16 months, reducing the annual rate of fall from -17.6% to -15.7% while mortgage approvals are reported to be at their highest level since May 2008. And while the Society, one of the UK’s largest mortgage lenders, warned that it would be “unwise to draw strong conclusions from the significant slowdown in the annual rate of fall”, this “surprise bounce” could indicate that the recent swathing cuts in interest rates might be persuading investors to return to the property market.

“With interest rates close to zero and a volatile stock market, property investment still looks like a favourable long-term option,” explains Anita. “Cash buyers definitely have the upper hand over those who need to arrange finance but a savvy investor who secures a discounted property could achieve a rental yield of upto 7% together with a healthy capital appreciation over the longer term.

Ian Potter of ARLA (Association of Residential Lettings Agents) agrees, commenting: “With interest rates so low, our members are seeing investors tempted back to the buy-to-let market as rental yields offer a greater return than the banks.”

RICS (The Royal Institute of Chartered Surveyors) reported in its March UK Housing Market Survey that “buyer enthusiasm continued to grow in March with interest in London picking up sharply.” It continued to state that, “63% more Chartered Surveyors reported a rise than a fall in new buyer enquiries, up from 46% in February. The rise in interest reflects both the drop in asking prices and the sharp fall in the cost of money. As house prices drop, those with finance are now looking to do more than window shop.”

“International buyers have also been quick to spot the opportunities presented by this unique set of market conditions and we’re already seeing renewed interest from investors keen to take advantage of the continuing weakness of the pound,” continues Anita. “As well as European investors, there is now a steady flow of buyers from Asia, particularly Singapore and Malaysia, who are starting to feel that London property represents good value for money at the moment.”