February 2011 | 2011 price forecasts already under threat - strong early year market conditions are already placing our full year 2011 sales price forecasts under pressure.

Highlights from the report:

Sales market
Early 2011 has been a bright one for the Prime Central London residential market. A number of notable transactions have already taken place andwe have seen an increase in demand from both UK-based buyers and overseas purchasers. The top end of the market has been particularly active.The political unrest in Northern Africa and the Middle East will have an impact on the Prime Central London residential market, but it is unclear at this early stage the scale of the impact or even whether it will be positive or negative. Despite these issues, the strong early year market is already placing our 3% 2011 full year price forecast under pressure.

Lettingsmarket
Prime Central London rentals demand has been very strong for over a year now. However, demand was marginally weaker during Q4 2010 compared to Q3 but this was purely a seasonal slowdown following the traditionally more active Q3 when enquiries are boosted by students. Lettings demand enthusiasm was still very high at 73% in Q4, albeit down slightly from 78% in Q3 (Chart 5). Despite this,Q4 witnessed even greater rental value increases than Q3.

Outlook
Several key themes are likely to mean that both sales and letting smarkets in Prime Central London remain vibrant and active during 2011.The flight to quality, the safe-haven benefits, the immunity from austerity measures and the funding advantages of the rich and super-rich are all likely to mean that demand at the top end of the London residential sales market remains strong this year despite amore dour mood elsewhere in the country.

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