This will be followed by a return to positive house price growth in 2011. The predicted peak to trough fall in Central London has been moderated to -27% from September 2007, compared to -29% in its previous forecast published in February 2009.
Recent market activity; with strong demand from international purchasers and a more limited supply of property than expected, given the loss of wealth and jobs in the capital, have led to this moderation in the overall fall in values.
The latest Residential Property Forecast (May 2009) predicts price rises of 6% in 2011 and 10% in 2012. Strong demand and London's restricted potential for property development will remain key drivers for growth, along with the Capital's fundamental strength as a global financial centre.
James Hyman, Partner for Residential Sales at Cluttons, said: "The current shortage of property for sale is already impacting the Central London market and the rate of house price falls is slowing. I am confident we will see a stabilisation of the market next year, followed by a strong return to positive growth in 2011.
"London remains in the grip of a sharp recession, but its position as one the world's principal business centres will underpin the city's recovery. London is still the city of choice for leading businesses and consequently demand to own property here will remain strong in the long run. The market will also continue to benefit from the improved affordability for foreign buyers, given the sharp fall in sterling versus most major currencies."
