Headline numbers mask price downturn for Chiswick property

Prices up by 22.2% over a year according to new data but numbers distorted by September 11th aftermath

Figures released this week have shown a massive jump in Chiswick property prices over the last year but point to a more recent downturn. Prices in W4 to the end of 2002 are up by 22.2% over the same period last year but slumped by 6.3% over the quarter according to Land Registry data.

Local property expert Chris Deering cautioned against reading too much into these figures, "The base for this numbers is when the market was hard hit by the aftermath of the September 11th atrocities. You can smooth out this effect by looking over a 15 month period which shows Chiswick property prices rising by only 3.2%.

At the same time Chris doesn't believe that the market is going into freefall. He commented, "The 6.3% fall is on the back of a very strong rise in the previous quarter and some sections of the market are showing strength with terraced houses continuing to move steadily forward." The average terraced house in Chiswick has risen in value by over 28.9% over the twelve months to the end of last year.

His analysis points to two major areas of weakness in the market. The top end continues to be fairly moribund with very few transactions in the +£1million category. There has also been a significant fall out in the flat sector which boomed about six months ago. Chris says, "Last spring there was something of a flat buying frenzy and prices rose precipitously. The average flat price rose to 64% of the average terraced house. Since that time terraced house prices have continued to rise but flats have fallen and now the relationship is back to a more normal 51% probably because of the large amount of new supply in that sector."

When asked about his outlook for the market Chris said, "The most notable thing about these figures is the volume numbers. They are much the same as this time last year which was a period of even greater uncertainty. It is getting a bit tougher for agents. The amount of bumpf coming through my door is rising which reflects increasing desperation. The top end of the market will remain dead as the FTSE100 flounders and terraced properties are now simply too expensive. Looking at current yields they are very vulnerable to a rise in interest rates."

Christopher Bramwell of, newly opened in Chiswick FPDSavills, admitted that the picture was unclear, "In recent years at the start of the new year we have been able to forecast on market prospects for the first quarter with a certain accuracy and confidence. This year, however, there is a great deal of uncertainty, not just about the forecast for the housing market but with regards to the national and world economic outlook." He added that the pool of buyers was now smaller and that they would be looking for value. At the top end of the market, in which FPD Savills specialise, he said that prices had fallen but even if predicted falls were to materialise they would not outweigh the gains seen in recent years.

There is not much optimism that the recent reduction in interest rates will get prices rising again. In fact many banks and building societies will be slow to cut their mortgage rates. To avoid this local financial adviser Stephen Rodgers of Berkeley Consultants is suggesting looking at tracker mortgages which respond instantly to changes in the Bank of England rates. For those considering locking in current low rates he says deals are available at below 4% for 2 year fixed rates and 5 year fixed below 5 %

Falling volumes were confirmed by other data from property research company hometrack which showed that sales in Chiswick during January fell by 27% whilst prices remained flat. John Wrigglesworth of hometrack said, " The London market shows no signs of recovering, having seen average price falls for the last three months. While lower value house prices continue to rise, the top end of the market, above £500,00, has seen falls of up to 10% within the last six months."

He dismissed predictions of a property collapse saying that low interest rates will support the lower end of the market limiting the overall fall this year although Chiswick will be harder hit than most areas because of the higher number of more expensive properties.

February 11, 2003

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