2009 CAPITAL VALUES AND RENTS RISE

In the second half of 2009, although the national recession continued with GDP declining by 0.4% in the 3rd Quarter, property prices in the Midtown, City and Docklands residential markets experienced growth of 3%. For the Midtown and City sub-markets this continued a trend which started in March 2009. For Docklands it signalled a return to growth in sales prices for the first time since September 2007, reversing a 20% fall in prices over two years. The second half of 2009 also saw a return to growth in residential rents across central London after 18 months of decline. Increases in prices and rents in 2009 confounded predictions made by all commentators at the end of 2008.

In the Midtown, City and Docklands markets residential prices rose from July to September 2009, but in the 4th Quarter prices stabilised. So, the evidence of rising prices in 2009 was limited to a six month period from March to September 2009 for Midtown and City and three months from July to September for Docklands. Figure 1 illustrates the different patterns of change in 2009 for the three sub-markets:
• Midtown prices increased by 2% in the first half of 2009 and a further 3% in the second half, giving aggregate growth of 5%.

• City clerkenwell property prices increased most strongly in the first half of 2009 by 5%, but the evidence was for a much lower rate of growth of 2% in the second half, with aggregate growth in 2009 of 7%.

• Docklands limehouse property prices were stable in the first half, but grew by 4% in the second half, so annual growth was also 4%. Looking across the whole market, average prices increased by 3% in the second half of 2009, making for an annual growth rate of 6%.