Since the collapse of Lehman Brothers in 2008, when most of the Property investment companies drowned, the Central London property market has been fascinating, and I can't think of one analyst who called it right. Within six months of the crash it is documented that the market in central London plunged by 20-30% - an almost unprecedented decline in such a short time.
So why is it that, only a few years on, the same market is considered one of the safest and most attractive places for London property investment?
First of all, although the statistics are true about the crash, very few properties actually traded hands at the time. Because of low interest rates and years of wealth accumulation, there were very few forced sellers. The majority of owners in prime central London had the luxury of 'bedding down' and taking the view that things would eventually improve. In truth, many owners now plan to hold their properties in a portfolio of assets for a long period of time, and they expect its value to drop at certain points. Indeed, as property investment companies London suggest, property has the advantage that you can rent it out when things get tough, giving an investor an attractive yield. And it's impossible to short-sell.
As a result, if you wanted to buy a good flat on a great street, even at the very bottom of the market, scarcity meant that you would have been lucky to see a 10% discount from the peak in '07.
That's not to say that there weren't bargains to be had. Of course there were, and many of us still wake up at night thinking about opportunities that we wish we could have had the bravery to buy. Those who were either forced to sell or who took the view that things were going to get much worse, were left with a tiny pool of buyers. Apart from anything, even if you did want to buy, it was nigh on impossible to find finance.
Significantly though, what has really made central London property shine as an investment is the speed at which it recovered. As fast as prices fell, prices subsequently rose, and by the end of 2009/ early 2010 the market not only felt hotter than ever, but was back at previous peaks. Since then it has gone from strength to strength. The same properties that dropped only 10% during the crash have now risen 20% - not from the trough, but from the peaks of 2007. If you did manage to buy at 30% below past peaks, and can now sell only three years later at 20% above those peaks, then it's time to feel pretty smug.
Reasons for the recent growth are complex, but when people saw how quickly the recovery happened it became even more attractive to investors seeking safety. These investors have not only created additional demand and therefore pushed prices up, but have also further altered the fabric of the London property investment market. Put simply, the more investors own property for the long term, the less property comes to the market for others to buy. Supply is kept low, and demand, fuelled by perceived stability, is kept high.
Jack Greenwood invites you to get more about passively searching property effectively in London. He is a professional property agent and regularly writes on property market, property value and property search agent to share his experience. You can visit us online http://www.homes-one.com/ to know more about his services like Property Search London and Property Search Agents.
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