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Fall in prime London housing values slowing

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KUALA LUMPUR: London’s prime housing values are still dropping but the rate of the fall is slowing, according to Savills Research.

It said buyer interest is beginning to emerge although this has not been translated into more transactions which are still significantly curtailed.

“We are by no means out of the woods yet. Further deterioration in the outlook for the economy, both nationally and internationally, along with the prospect of further widespread job losses means the short to medium term outlook for the economy has worsened,” it added.

Savills Research said, nevertheless, the rate at which capital values in central London are falling had slowed significantly in the first three months this year, suggesting that the worst of the falls might be over. Average values fell by negative 4.2% in the quarter to March 2009, half of that seen in the last quarter of 2008.

“We have not yet reached the bottom of the market but buyer registrations in the prime London markets as a whole have doubled over the past quarter but, more importantly, deals agreed this month have risen to levels not seen since March 2008.

“Deals are now settling at negative 25% to negative 30% off peak. A shortage of stock is beginning to manifest, demonstrating that falls of this magnitude are sufficient to motivate need-driven domestic buyers,” it said.

Savills Research expects prime central London housing market to cease falling by end-2009 as investor demand starts to revive against still-low levels of stock. Any growth in values, however, is likely to be suppressed until there is a return to confidence in the UK economy.

“We stand by our forecast that total falls from peak will not exceed negative 30% in prime central London and negative 25% in the prime regions,” it added.

Meanwhile, rental values across prime central London have fallen a negative 11.7% from their peak.

The corporate lettings sector continues to be worst hit with a quarterly fall of negative 6.6% in rents in the core area of Knightsbridge, Chelsea, Mayfair and Belgravia. Average rents in this area are now down negative 15.6% from their peak, according to Savills Research.

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