International Property Journal - News and information on global property markets

Analysts agree that 2010 won’t be a banner year for residential property in London. At the very least, there is consensus that the market is unlikely to return to the heady days of cash-crazed Russians, million-pound designer lofts and double-digit price growth.

But analysts are far apart in their actual predictions for the market, suggesting that no one is absolutely sure what the hell is going to happen.

Knight Frank, for example, predicts a tough period that will ultimately see a fairly respectable three percent growth in prices in prime central London by the end of the year. Equally respected Jones Lang Lasalle, on the other hand, sees bleaker days ahead, with prices dropping a scary six percent in central London and seven percent for the overall U.K.

Here is the spread of forecasts (and thanks to Black Brick Property Solutions for compiling the chart):

For its part, Black Brick suggests a “degree of caution is warranted” in its December report.

“Though ‘less worse’ than before, Western economies are still fragile and prone to shocks,” the report says. “With unemployment likely to rise, higher taxes looming, lending conditions likely to remain difficult and the uncertainty of a general election around the corner it is extremely hard to make a case for the current positive price trend to be sustained into and throughout 2010.”

Prices have actually bumped up in recent months. Halifax’s November report shows an increase of 4.2 percent from the start of the year. But a new realism seems to have gripped the market, thanks to several factors, including the availability of credit and general skepticism of government actions. The prime minister’s recent decision to tax bonuses by 50 percent sent visible shudders through the market.

“While we make no claim to currency or equity expertise, the scale of support to prime central London property prices from a weak pound and the confidence engendered by a sharply rising stock market are unlikely to be repeated in 2010,” Black-Brick predicts. “Moreover, should transaction levels return to historic norms the increase in supply is highly likely to curb price inflation.”