I don't dare bet against the prices of the best houses in the best parts of London
London property is clearly horribly overpriced. But don’t bet on prime properties in the best areas falling in price, says Merryn Somerset Webb
I was asked at the FT Weekend Live festival last week what I thought was going to happen to London house prices. I said what I usually say about the glut of new build properties: demand always creates its own supply, and there are a limited number of people who can afford to buy at bubble prices.
But I went on to say that while London is clearly horribly overpriced, while prices in prime central London have been falling for some time now (prices in Chelsea are down 9% on the year), and whiIe wouldn't want to be long houses in non-prime areas I wouldn't want to make big bets against the best houses.
Why? The pound. The more it falls the cheaper the fabulous political safe-haven that is the UK looks to foreign buyers (note, by the way, that the Brexit vote has shown us to be even more politically stable than even the greatest of optimists ever dreamed possible).
So it is entirely possible, I told my audience of buy-to-let investors (a show of hands made it clear where their loyalties lay), that the next year could see volumes and perhaps prices rise again. I'm glad I added that little face-saver to my answer as that seems to be exactly what is happening.
A report just out from Knight Frank declares "cautious optimism" on the market. Since 23 June the firm has seen a 22% rise in "prospective buyers", a 49% rise in viewings and a 19% rise in the number of properties under offer over the same time period last year.
This might not translate into actual price rises, given the dynamics of the London market as a whole (over priced in a time of overall oversupply), but it could easy stem the prime London property price falls of the last year.