London Prime Property March/April Analysis   True to form and in line with recent market tracking over the past three to four quarters, London Prime property during March and April has remained relatively soft. But this could in fact present an ideal opportunity for medium to long-term opportunities, as smart investors take advantage of the wealth of prime property in up and coming areas, and add them to their prime market property portfolios.   Election fever   One of the biggest announcements that could have a huge impact not just on London prime markets but the housing market in general is the Conservative’s announcement in their election manifesto on April 14th. In amongst all the vote-baiting policies was the revival of the ‘right to buy’ scheme. Initially, this move might not cover the Monopoly board ‘blue square’ locations such as Chelsea, Park Lane and Mayfair. But other prime locations such as WC1 and some up-and-coming parts of east London including Docklands do contain a high number of council properties that, if the Conservatives return to office in May, might be opened up to the right to buy scheme.   The result could be a previously untapped well of prime London property that could come onto the market within the lifetime of the next parliament. It’s a medium to long-term investment, and is naturally subject to a lot of variables, not least of which is the outcome of the election. But with this and other pledges such as the removal of properties of £1million and less from inheritance tax brackets, and the shadow of the mansion tax all having an influence on the markets, it’s unlikely that we’ll see any major movement in either the standard or the prime markets until the dust has settled on May 8th.   The March/April numbers   During the first quarter of 2015, prices in the prime markets locations of London fell by 0.5%, following an average price correction of -2.6% in the final quarter of 2014. So while this doesn’t indicate a bounce-back to a more bullish market, it does show that the previous downward slide has slowed. The market is still soft, certainly, but it isn’t imploding as some predicted it might after last year’s autumn statement. Much of this adjustment was triggered by a single event, the reform of Stamp Duty as announced in December 2014.   This does mean that the rolling average over the past 12 months for London Prime property has slipped into the negative, albeit by a very small degree. Once the election has been settled we will probably see the market address this, with more movement in the prime sector easily reversing that small negative trend.   There is one area of London Prime property that seems to be doing rather well, though, and that’s East London. Canary Wharf, Docklands and the increasingly popular boroughs of Shoreditch and Hackney are showing steady positive movement of between +0.5 and 1%. The outcome of the election and whether the mansion tax comes into play will determine whether this trend continues beyond May, and whether other London Prime areas will follow suit. Expectations are that once the election is over the market, buoyed by low inflation, an availability of lending by mortgage suppliers and a general ‘feel good’ factor will restore the fortunes of the market across other parts of the capital.   Other outside influences   The biggest engineering project in London for years is now really starting to have a major effect on Prime markets. Crossrail is still some way off completion, but its influence on the market is already taking hold. Analysis of property prices within a 10-minute walk of Bond Street station shows that the improved transport network is buoying up the prices of prime property in the West End. Crossrail’s influence is underpinning the value of properties all along the transport corridor, both within the London prime market and beyond.   The London Rental Market   As is often the case in the first quarter of the year, rental interest in prime areas has been strong, and some areas have become hotspots for overseas investors and tenant (in particular young professionals) drawn to upmarket developments. Availability is relatively fluid and while rents are reasonably stable and offer a fair return for landlords and investors, it’s the smaller units that are really showing a surge in interest slightly outside the usual prime locations. This is due to attractive prices and high yields of 3.7% - 5%, compared to variants between 2.2% and 3.7% in established prime areas.   London Sales Market   The London prime market throughout February and March has been constricted. Some prime locations have been under-performing in comparison to up and coming areas such as Islington, Waltham Forest and Haringey. Hackney and Tower Hamlets, two boroughs that had previously performed well, seemed to be relatively quiet at the moment, with sales soft and interest limited. This, however, could be the right time to move on available properties in these areas, as sellers may be more open to negotiating on price to shift stock.   While sales of buy-to-rent appear to be reasonably resilient, freehold and leasehold sales are down on the first quarter. This may again be due to the election influence, whereby many investors may be waiting to see what the outcome is before making a decision to invest in prime real estate in traditionally popular areas.   Yields   The average asking price has gone up around 1% during February across the board, including both the standard and prime London markets. Another indicator that the market is at least starting to move a little is that ‘time to sell’ days have dropped from 69 days in January to 61 days in February. This may just be the usual annual adjustment as we move out of the traditionally flat winter period and into the spring, but it may also show that there is more interest in buying and selling in general.   All figures and quotes are accurate at the time of publishing

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