Central London house prices are down 13.2% annually, according to the company, and 18% from their peak in Q3 2007. There was a marginal increase in supply in Q2, but overall supply remains limited. Potential sellers are deterred from moving by low interest rates on existing mortgages combined with relatively high rates on new mortgage lending, particularly at loan-to-values above 70%
But Cluttons believes that if sterling continues recovery against the dollar and euro, current strong international demand may wane. Short term price recovery could trigger an increase in supply, causing further price weakness in latter half of 2009
