In terms of market segmentation, the falling market has increased

In terms of market segmentation, the falling market has increased the differentiation of the three sub-markets, as follows.

• In Midtown there was sales activity where it merges into the West End, especially at the top end of the market for flats at or around £1 million. Here the profile of buyers is diverse including authors, actors and international buyers and not so dependent on the health of financial and business services. A shortage of properties being placed on the market for sale will result in further price falls being modest compared to other parts of London.
• In the City, on the other hand, there has been little activity at the top end of the market in the £600-£800,000 bracket, as owneroccupiers and investors hunt out low-cost studios, one-beds and
pied-a-terres. The majority of sales in 2008 were completed at below the £500,000 level.
• In Docklands it is tempting to state that the market evaporated completely in the second half of 2008, with very few owners attempting to sell, but those who did attracted what they considered “silly offers” at substantial discounts to asking prices by unrealistic purchasers. There were, by the end of 2008, a few
genuinely distressed sellers beginning to appear due, in part, to falling rents (see the Rental Market section).

The volume of sales being conducted through our offices is around 50% of the peak levels experienced in 2006 and the first half of 2007. We believe this to be the case right across central London. However,
the volume of sales in the final quarter of the year was identical to the final quarter of 2007 when London’s residential property market collapsed. It is therefore our view that the market has been “bumping along the bottom” of the current cycle, and as time passes we get closer to a position where the volume of transactions will start to increase.
Prices may have fallen by 15%, but we do not believe the volume of transactions will be further reduced. With the Base Rate set to fall below 2% for the first time since the Bank of England was founded in 1694, there is a strong chance that the number of transactions will slowly start to increase in 2009, in part due to Government intervention, lower asking prices and very attractive interest rates.