Prime property price growth in London remains muted, latest report shows
25-09-2012
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Price rises averaged just 0.5% in the three months to the end of September. This follows a 0.9% increase in the second quarter of the year and sees annual growth slow to 5.1%, down from 9.1%, the report from international real estate adviser Savills reveals.
But prices are still 45.8% above the bottom of the market and 14.1% since the peak of the market in 2007.
Central London has performed best, with an increase of 0.8% in the third quarter of the year and prices are 53% above the bottom of the market and 21.8% above the peak of 2007.
‘Despite some high profile sales, heightened uncertainty in the eurozone and a cautious response to changes in the tax regime for high value property has caused the heat to come out of the market albeit without leading to price falls,’ said Lucian Cook director of Savills research.
‘Detailed analysis of the index suggests that it is increasingly the best in class of prime London homes that are underpinning average price growth. In prime central London only a third of properties showed any price growth in the past three months. Just over half remained flat and around a tenth showed marginal price falls.
By contrast, the best performing ten per cent of properties saw prices rise by 3% or more,’ he explained. Are still seeing annual prices growth approaching double figures. These are Chelsea up 10.5%, Knightsbridge up 9.6%, and Belgravia up 8.3%. Cook said that this reflects the fact that they are the most established core prime central London locations which are firmly on the radar of the international super wealthy.
Chelsea had a standout quarter, recording the highest price growth of any location at 2.2%. Together with South Kensington, it benefitted from interest from French buyers in a flight from eurozone woes and the threat of punitive taxes at home, giving a real boost to the best addresses.
Areas dominated by domestic buyers saw only marginal quarterly growth, and while annual growth has been more or less in line with the prime central London average, prices exceed the peak of 2007 to a much lesser degree. Cook said this is a clear reflection of far lower levels of bonus money entering the market.
‘The Olympics undoubtedly contributed to slower market activity in the last quarter, and as a result across the prime London markets we have seen a rise in stock over the summer months. Looking forward, the outcome of consultations on the taxation of high value property will be important to international demand, while the pace of London economic recovery will dictate sentiment amongst domestic buyers,’ Cook pointed out.
‘Evidence to date suggests that while viewing levels have picked up this month, buyers are now slower to commit and want to be sure of value. This indicates little price inflation in the short term, though we expect properties that are priced according to current market conditions will continue to sell,’ he added.
