By the end of 2007, stories of the “over-heated” central London housing market
including property clerkenwell and property barbican were “yesterday’s news”, yet these stories had dominated press commentary for the 18 months from the start of 2006. In that year the rate of price increases in the sales market was 22% in the City and 26% in Docklands, at or close to record levels. That rate of growth was maintained in the first
three months of 2007, but progressively slowed and then reversed during the course of the year to end at 9% and 11% respectively for 2007.
The second half of 2007 began with the MPC raising the base rate to 5.75% at
its July meeting, the fifth increase in less than a year, and the broad expectation
that the rate would be pushed out to 6% before the end of 2007. With base rates
up 28% from 4.5% in August 2006 to 5.75% in July 2007, demand for property had
reduced across central London, characterised by a lower rate of sales and reduced
rate of price growth.
