London has been the centre of considerable property investment of late, but there is a notable lack of cash buyers among those choosing to put their money in bricks and mortar. Research from Cluttons has revealed that in 2012, cash buyers dropped from 74 per cent in 2011 to 49 per cent. This has been attributed to a diminished bonus culture and the calming of eurozone fears.
The proportion of mortgaged buyers rose from 26 per cent in 2011 to 52 per cent in 2012, as public and political pressure increased to limit bonuses in the banking sector. Chancellor George Osborne has threatened to separate financial institutions into distinct retail and corporate entities, which will reduce and in some cases eradicate bonus schemes.
While the capital continues to outperform the rest of the UK, with a four per cent price rise forecast for 2013, Cluttons claims a period of lower growth is beginning for prime property in central London. The capital has long been considered a safe haven for investment at a time when the rest of Europe was experiencing sliding property prices. However, the threat of a eurozone collapse has been all but removed and investors are now starting to investigate other parts of the continent. This is helping to contributed to falling numbers of young professionals choosing to make their home in central London, not to mention a fall in the number of registered cash buyers.
Nonetheless, there is still no cause for panic and London looks set to remain the hottest location in the UK. Overall demand is still strong, according to Cluttons, and first time buyers and other mortgaged working households are beginning to enter the market with improved confidence. Sue Foxley, head of research at Cluttons, explained: "Banks are facing pressure from regulators, government, shareholders and the public to clean up their act, which has resulted in a softening in the big bonus culture. The severely limited supply of property in the prime central London market means that that this has had limited impact on prices to date, with overall demand remaining healthy. However, we are seeing a shift in the profile of buyers as first-time buyers and mortgaged households have stepped into the market."
- Tuesday 05 March 2013