Given the current market conditions has anyone any opinions on the London Property scene. I have a property in the southwest (SW15) and am in a position to sell at 15% profit over an 18 month period.

My dilema is whether to cash in, assuming the market will depreciate by 20 to 30% over the next 2 to 3 years, or ride the crash (if it happens) and hold for anything up to 7 to 8 years in order to get my money back and make a decent return.

If I did cash in then Id be facing large rental costs to live in such an affluent area, if I dont then I could be stuck with having to remortage in a year or two's time with a much higher LTV than Id like to negotiate with.

Given that London is different to the rest of the country and that South West London operates in its own bubble as well Id appreciate any thoughts on the state of the market there both now and for the next few years.

Hi James,

Please see link
http: / /www .home .co .uk /guides /house _prices _report .htm?location=putney &lastyear=1
As you can see flats are +2% (i'm assuming you own a flat)? growth for the last year and for the South East average house prices are up 4.1% since April 2007. Far from the near 10% National average drop widely reported in the press.
All real estate is local. There is no such thing as a national house price average. What you have to look at really is your local area and street, what are the key drivers? What's holding the market up there and will that continue despite the credit crunch? I know Putney is a very desirable area and if you are in one of the best streets or areas then people will always want to live there.

I think it was J. Paul Getty that said, "Buy when everyone is selling and sell when everyone is buying". If it's cheaper to pay your mortgage than move to rented accomodation then it seems like you have answered your own question?
The question is what are you going to do with your 15% gain? With real rate of inflation close to 8-10%pa add in the extra cost of the difference of your mortgage to the cost of your rented accomodation you will need to invest it extremely well to stop these costs eating into your capital. Better to have some debt in the form of a mortgage as a good hedge against inflation. ie. As the purchasing power of your pound goes down (as it will do as we know the European central bank and the Bank of England have expanded the money supply by Billions to try and hold up the housing market), so too does the value of your mortgage by paying it off with cheaper currency in the future.

I hope some of this helps?