London housing market bubble 'shows signs of bursting'
Friday 9th September 2011
A property firm which buys up distressed property has forecast that the London housing market bubble will burst, with the catalyst being the riots.
But the claim has been countered by London agents Douglas & Gordon, which said there were no reported fall-throughs as a result of the London riots.
However, in the last month, PPR Estates says it has started receiving inquiries from property owners in riot-affected areas of London who are now seeing sales fall through and a collapse in buyer interest.
The firm’s director, Nick Hopkinson, said: “This change in market sentiment may well prove to be the event that bursts the unsustainable London property bubble that’s built up over the last year.
“Two very different property markets have emerged in London and across the rest of the UK in the last year.
“London has been the one area of the UK to buck the downward house price trend. Prime London prices, limited supply and cash-rich international buyers have masked the real state of the housing market by propping up the national statistics.
“PPR has had relatively few distressed inquiries from London sellers as a result of this unique dynamic.
“However, since the recent riots, PPR has started receiving inquiries from worried owners in affected areas such as Lewisham, Croydon, Walthamstow and Tottenham, who have seen buyers withdrawing their interest.
“We are also aware of international buyers withdrawing from investment purchases as a result of a loss of confidence in the ‘safe haven’ investing benefits of London.
“As we move into autumn I fear this may prove to have been the catalyst that bursts the London property bubble.”
Hopkinson said that outside London, inquiries to his firm continue to climb, and it is receiving ‘hundreds’ of inquiries each week from distressed home owners, landlords and businesses wanting to sell their properties.
The firm said that, increasingly, sellers are trapped in negative equity, and that it cannot help over 90% of inquiring individuals as their properties are worth less than their assets.
In the same period last year PPR was able to help over 15% of sellers outside London.
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