London house prices fall at record rate


Date: 1st November 2008 | PDF Version

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Liam Bailey, head of residential research at Knight Frank commented: -

“The market has been in decline in terms of sales rates for well over 12 months, in terms of price falls these began in earnest in March – although properties under £2m were falling as long as a year ago. However this general decline was given additional impetus in September and October this year.

“Up until the summer many vendors were holding to their pre-crunch asking prices. After what took place in the financial world over the past two months – an increasing number of vendors have decided to cut prices to achieve a sale. Our index shows this trend clearly – with the rate of month on month price falls gathering pace.

“We have become used to prices rising and falling at a glacial pace in the UK, generally prices move a maximum of 2% per month – which can still add to fairly punchy annual rates of change. But a 4% fall in price in a month is suddenly very noticeable – equating to £160,000 on a £4,000,000 house (or more than £5,000 a day). We ought not to be too surprised, at the height of the recent boom prices were rising by the same rate, so there is a symmetry of sorts to the current pattern of price movements.

“There is a bright side to the price falls – they reflect the fact that vendors are now increasingly realistic about price levels and are more understanding about what prices are achievable. Whilst the market is still well down on historic sales volumes, the reassuring element is that sales volumes rose slightly during both September and October whilst prices fell sharply.

“We do not expect the market to bounce back any time soon – but the indications are that cutting prices to sensible levels gives you a half decent chance of achieving a sale.”

Knight Frank, Prime Central London Index, October 2008

  KF Prime Central London Index 12 month % change 6 month % change 3 monthly % change Monthly % change
Nov 07 4,662.5 30.6% 11.2% 1.6% 0.1%
Dec 07 4.711.2 8.6% 8.9% 1.4% 1.0%
Jan 08 4764.4 26.2% 6.0% 2.3% 1.1%
Feb 08 4792.4 23.8% 4.4% 2.8% 0.6%
Mar 08 4796.6 20.4% 3.3% 1.8% 0.1%
Apr 08 4739.7 15.8% 1.8% -0.5% -1.2%
May 08 4660.2 11.2% -0.1% -2.8% -1.7%
Jun 08 4577.3 5.8% -2.8% -4.6% -1.8%
Jul 08 4491.4 -0.1% -5.7% -5.2% -1.9%
Aug 08 4414.5 -3.8% -7.9% -5.3% -1.7%
Sep 08 4321.3 -7.0% -9.9% -5.6% -2.1%
Oct 08 4152.6 -10.8% -12.4% -7.5% -3.9%

For further information, please contact:

Liam Bailey
Head of residential research, Knight Frank,
+44 (0) 20 7861 5133;
+44 (0) 7919 303148
liam.bailey@knightfrank.com

Davina Macdonald Lockhart,
PR manager, Knight Frank,
+44 (0) 20 7861 1033;
+44 (0) 7796 996154
davina.macdonald.lockhart@knightfrank.com

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Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 196 offices, in 38 countries, across six continents. More than 6,770 professionals handle in excess of US$700 billion (almost £355 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com.

Knight Frank area definitions
Prime central London is taken to include: Mayfair, Marylebone, St John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and the South Bank (from Westminster Bridge to Tower Bridge/Shad Thames)

Prime London is taken to include all the above plus: Canary Wharf, Hampstead, Fulham, Richmond, Wandsworth, Wapping and Wimbledon.


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