Homeowners in the London Borough of Greenwich woke up this morning to the happy news their addresses are now officially ‘royal’.

It has been announced that the Greenwhich  to become a Royal Borough as part  the Queen’s Diamond Jubilee celebrations which are due to start later this year. The move celebrates the borough’s links to monarchy, which include the Royal Observatory and its Greenwich Meantime; Royal Arsenal; and Royal Naval College – plus both Elizabeth I and Henry VIII were both born within its borders.

Given the borough’s blue-blooded history, which goes back to the Middle Ages, it’s a surprise royal recognition has been so long coming. But during the ‘interregnum’, as Britain’s brief and bloody republican experiment is known, Cromwell seized crown lands in Greenwich to make way for his family manor house. Memories are long within the royal household, it would seem.

An aerial view of Greenwich including the Thames, former Royal Naval Hospital and Park

Today’s excitement at the name change is focused on the new impetus Greenwich’s recently-stalled gentrification may receive. Although awash with upmarket restaurants and boutiques these days, Greenwich’s property market has endured price slides recently as City bonuses have dried up; a situation not helped by the glut of new homes for sale to the east of the Cutty Sark dock area.

But agents in the borough are hoping that royal endorsement will help propel the area up the popularity stakes again, particularly as it is only the fourth borough to be honoured this way, alongside the Royal Boroughs of Kensington and Chelsea, Kingston upon Thames, and Windsor and Maidenhead.

“Greenwich has always taken tremendous pride in the borough’s long history of royal connections with Greenwich, Woolwich and Eltham dating back almost 600 years and which continue so strongly right up to the present day,” says Greenwich council leader Chris Roberts.

Amidst all the economic doom and gloom, there’s a glimmer of hope for property sellers in prime areas of London. It’s been revealed that the asking prices of properties increased again in January 2009, for the third successive month.

This is highlighted in our latest House Price Index, which is based on an analysis of the prime market in the most prestigious areas of London (and included a sample of over 62,000 properties). Property prices were found to have risen across all five areas of London, with the highest increase noted in West/South West London where a rise of 2.29% was recorded. The property market was particularly good in Chiswick and Hammersmith, where the asking prices of properties rose by 14.3% month on month.

Agents are reporting that there’s been more interest in property over the last three months – particularly from savvy overseas buyers who are keen to benefit from the weak pound.

The House Price Index also revealed that the average weekly rental prices in prime London properties have fallen. Whilst this isn’t great news for landlords, it does put tenants in a great position, especially if they’re willing to negotiate on price.

Q. Given that so much has been written in recent months about the demise of the 2008/9 property market, what was it that caused the last house price crash? I would be interested to know this in order to do an historical comparison.

A. After the major recession of the late 1970s ended, right up to 1988 in fact, UK property prices saw a similar growth spurt as we have seen in the past decade. There were two key reasons for the crash in the late eighties. Firstly, the era coincided with an increasing demand from a more affluent post-war generation encouraged into home ownership by the then Prime Minister Margaret Thatcher. Secondly, there was great liquidity in the economy with an easy availability of credit.

However, when the Chancellor of the Exchequer, Nigel Lawson, announced in March 1988 that he was ending “double mortgage tax relief,” a process whereby both parties of an unmarried couple could claim tax relief (MIRAS) on mortgage interest, people flocked to snap up property and real estate inflation went through the roof as sellers cashed in on the boom.

As soon as the cut-off date was reached a few months later, interest in property buying subsided almost overnight with viewings and sales plummeting. Estate agents struggled to sell even competitively priced property and the absence of interest in the market led to the crash. The killer blow came between May 1988 and October 1989 when interest rates rocketed from just under 7.5% to nearly 15%. It was this increase coupled with lack of affordability because of the cessation of double tax relief that spelled the death knell for property, a market reversal which was to last for several years. Like all markets, however, recovery eventually comes.

We asked property experts Sarah Beeny, Raj Shastri, Gary  McCausland, Tony Bayliss and Arv Soar where they thought the UK property market was headed in the next 12 to 18 months. Here’s a taste of what they had to say:

“I started buying and selling property many, many years ago, but in more recent years people stopped seeing their home as a home but more as a commodity. That’s okay if that is your business and what you do as a living, but you have to make a distinction between something that is your home and something that’s bought as an investment.

“Mortgages are becoming more available again and there is certainly more liquidity in the property market now than there was at the end of last year.

“The problem with many house sellers today is that they are still expecting top prices when they are selling but desperately reduced prices if they want to buy. Things are starting to give, though, and people are starting to be more realistic. Mortgages are becoming more available again and there is certainly more liquidity in the property market now than there was at the end of last year.” Sarah Beeny

“My advice is to do what Phillip Green is trying to do – buying up half the High Street at low, low prices. In a few years’ time the question people will be asking is: ‘when did you get into property? 2009, wow, that was a great year to buy: 25% discounts, lowest ever interest rates, highly motivated sellers.’ Take advantage now ready for the next property boom which will make the next round of property millionaires.” Raj Shastri

 “…all the indicators are that the bank of England will be keeping interest rates low and lenders will eventually succumb to the pressure and start passing them on. In 2009, the cost of your mortgage should become cheaper – and lots more products on the market will mean that buying a home should become easier.

“The property market is forever turning and moving. It goes up and goes down but will eventually go up again. I think we’ll start to see shoots of recovery this year and prices bounce back in 2010.”
Gary McCausland

“My own portfolio was in the student market and if I were starting afresh today, I would still go for the same market because universities continue to expand and there is always a constant need for student accommodation. The returns from students are far higher than from families, with 8-12% still possible in the current climate. The key is to choose the right property in the right location.

“My advice would be to look for university towns or cities and find a property with potential for four or five study bedrooms within a five-minute walk of the main campus. Choose something which needs a bit of work, because these tend to be a lot cheaper and sellers will be desperate for a buyer.” Tony Bayliss

“I am finding investors are putting a lot more cash into each property purchase and have seen a marked increase in cash buyers. Investors are no longer leaving money in the bank due to poor returns and pensions are particularly affected so people are looking for positive income streams.

“Now is the time to buy and hold on to property! Values always do rise, as do rentals increase. The banks need to inject liquidity back into the market and the Government will hopefully force them to. The signs are that the property market will pick up in 2010. Property as a financial investment makes more sense now than ever.” Arv Soar

Want to know more? Read the experts’ property predictions in full on Primelocation.com.

A new survey by Impartial.co.uk says we are all seriously overestimating the current value of our homes – and that younger homeowners especially are in denial about falling home values.

Apparently the average younger homeowner thinks their property is worth – oh, about £2,000 more than it was a couple of months ago. (Maybe they added a wet room.)

Well, this is awkward. Actually, kids – your property is more likely to be valued at… er, around £7,000 less. Sorry about that.

Of course it would be unfair to put the spotlight on the iPod set alone. Many sellers are only now starting to realise that it’s necessary to lower their asking price if they want to move house any time soon.

Savvy Londoners apparently have a more realistic view of things, estimating their property values to have fallen by around £46,000 on average. I can only imagine this pragmatic point of view is due in part to growing up fast on the mean streets of Mayfair.

The Primelocation.com September House Price Index shows that prime London values have decreased for the fourth month running, dropping nearly 1.8% since August. The decline in house prices has been quite widely documented.

So why are the majority of us still in denial about the value of our homes? And why younger people especially?

Here are some possible reasons:

• We’ve been too obsessed with Obamarama to notice what else is happening in the world
• Anytime our eyes alight on a newspaper article about falling house prices, they’re quickly distracted by a photo of Amy Winehouse looking dangerously malnourished on the opposite page
• The Olympics dazzled us for a month or so with shiny opening and closing ceremonies – not to mention all the sports and whatnot. Blame China.

Any other ideas?