“Stock is down across London by 35% year on year. The south in general is down by 40% although, due to increasing market share, stock levels at Chesterton Humberts are actually up.
“In Dublin last year, which was at the same point in the cycle that London has now reached, stock levels fell to 50% year on year. I have no doubt that we will see something similar here in London, not only for the reasons stated in Hometrack report. What is happening in the UK is that many of the vendors we pitch to are only interested in a one off viewing. They don’t want the neighbours to know that they are testing the market, because they believe that there is little likelihood of a sale. When we inform them they will require a HIP, a large proportion say that they will not bother until next year. There is not pressure to sell because mortgage repayments have fallen to such low levels, that it would, in many places in London, be more expensive to rent, than to pay the mortgage.
On this basis, the price levels we have found in London are sustainable. Volumes are unlikely to increase much because of lack of lending but a weaker pound driven by the government debt situation is likely to continue to bring buyers in from Europe.
The Midlands is different, supply is still high there, as there are higher proportions of households with negative equity than elsewhere in England. Unemployment is spiralling upwards and lending is even more restrained than in the south. Demand for housing is considerably lower than in London and the south, as shown in the Hometrack report, as these areas don’t have the international buyers coming in to replace the lost domestic market. I expect further price falls of 6% here.