The average property price in prime central London breached £1.5m in 2013, hitting £1,543,102 at the end of November after “robust” but “unremarkable” annual growth of 12.5%, according to the statistical mavens at London Central Portfolio.
And – along with every other resi forecasting unit – LCP is predicting another year of prices rises: +5.5% in 2014 to take the average PCL price to £1.62m by the year’s end.
Over the long term – going back 40 years – prices have been rising by 9% a year (albeit with a few peaks and troughs), says LCP: “Rolling annual price growth, the most accurate market indicator as it removes seasonality or monthly volatility, has shown unremarkable growth of 12.5%. This compares with average growth of 9% over the last 40 years. It is way below the 26.1% growth experienced in 2000 – when no analyst even cottoned-on to potentially dangerous price escalation and which corrected itself in due course, without artificial manipulation.”
The investment house – which is launching its fourth fund at the end of this month – also points out that 2013’s above average growth could be down to admin rather than market performance: many of the UK’s most expensive homes were – until G.Osborne changed the taxing rules – bought in corporate wrappers, so evading the Land Registry’s databases; they’re now more likely to be bought in personal names. One Hyde Park’s £29.35m flat is the go-to example of this “de-enveloping effect”.
LCP’s Forecasts for 2014
- Average prices in prime central London to rise by 5.5%.
- Transaction levels to rise.
- The introduction of Capital Gains Tax for overseas buyers in April 2015 “will have little material impact on price growth” as a supply/demand imbalance will continue to drive the market onwards and upwards. “The absence of CGT has been a bonus for international buyers, but not a fundamental driver.”
- The looming General Election may cause buyers to “wait and see” if the threat of a Mansion Tax looks realistic.