Prime central London property market leaves two years of stagnation behind
The prime central London property market is seeing signs of recovery with an analysis of data covering the second quarter of 2017 showing that two years of stagnation is coming to an end. Sales volumes strengthened slightly, with an annual increase of 4.8% and average prices reached £1,946,151, up 7.9% quarter on quarter, according to the report from London Central Portfolio in conjunction with independent analysts Acadata using figures from the Land Registry. However, it points out that the increase in average prices can largely be attributed to a surge of high value sales with buyers taking advantage of price discounting at the luxury end of the market. Underlying price appreciation for the rest of the market remains significantly less buoyant. The analysis also reveals that the second quarter of the year saw the most expensive sale ever with £90 million paid for a flat in The Knightsbridge Apartments. As a result, the top 10% of the market performed particularly strongly, seeing a 20% increase in average prices to £8 million. However, the most active sector in central London was the £5 million to £10 million bracket, where the proportion of sales increased by 23% compared to the first quarter of the year. Excluding the top 10% of the market, average quarterly price growth was 4.5%. The report suggests that despite a slow down as the market adjusted to increased residential taxation and Brexit, this recovery is, in part, a result of buyers seeking safe havens in the face of increasing uncertainty as tensions mount in the United State, the Middle East and worldwide, together with the attractions of weak sterling and low interest rates. Whilst buyers have capitalised on luxury property discounts, a divergent dynamic is being seen in the lower value market. The proportion of sales under £1 million decreased by 9%, compared with a 20% increase in the over £5 million sector. Growth in the buy to let sector was the most sluggish with a 1.3% increase in average prices for property under £810,000. ‘The increase in average prices appears to reflect a greater proportion of high value properties being sold, rather than any significant underlying growth. Not only have we seen some very large individual sales but transaction data shows the £5 million to £10 million bracket was the most active with a 23% increase over quarter one,’ said Naomi Heaton, LCP chief executive officer. ‘This can be attributed to international home buyers taking advantage of notable price discounts, alongside beneficial currency exchange rates. The buy to let sector, on the other hand, is seeing a much slower picture as investors continue to adopt a wait and see attitude,’ she explained. She pointed out that Greater London is principally a domestic market and whilst prices continue to show growth, slowing sales volumes reflect the current state of the UK economy. ‘Concerns around Brexit have impacted the feel good factor which drives buyers’ decisions, whilst affordability issues resulting from caps on mortgage lending have hampered buyers ability to trade up or get onto the housing ladder,’ she said. ‘Falling sales volumes are also exacerbated by problems within the new build sector. This has seen international speculators pull back in the face of uncertain or negative returns. It is reported that the number of new building starts in London will fall to just 21,500 this year, meaning only 18,000 new homes will be built by 2021,’ she added.
Tags : INTERNATIONAL