The average price of a property in prime London slipped by 0.9% in Q2, says Savills’ research team, leaving the annual change at -5.3%. Values are now 6.9% off their mid-2014 peak, with 0% forecasts for this year now looking rather optimistic.
Most areas of prime London have seen falling prices so far this year, and – a year on from the Brexit vote – everywhere has seen values drop on an annual basis.
Prime Central London has seen the biggest falls: -1.3% in the last three months leaves values 6.8% down on the year, and 14.4% off-peak. Ten-year price inflation, is, however, still positive, at +23.4%.
Locations with a high proportion of buyers from the financial sector, whether domestic or European, such as Kensington and Notting Hill, Canary Wharf and parts of south and west London, have also seen small falls in the face of increased buyer caution. These include locations that have seen the largest post downturn gains.
Prices in the prime south west and north east markets are still 35% up on their 2007 level. Savills’ forecasts, published in November 2016, anticipated that prime London values would fluctuate this year, but end on zero growth across the full year. Increased levels of political and economic uncertainty make it less likely that year to date losses, which the firm puts at an average of -1.2% across prime London as a whole and -2.1% in prime central London, will be recovered in the short term.
|Q2 2017||Prime Central London||Prime North West||Prime South West||Prime West||Prime North & East||Outer Prime London average||All Prime London average|
|Year to date||-2.1%||0.6%||-0.8%||0.1%||-2.5%||-0.8%||-1.2%|
|Since 2014 peak||-14.4%||-4.0%||-4.1%||-4.6%||-3.9%||-3.4%||-6.9%|
|10 year growth||23.4%||21.2%||35.0%||
There is a lack of urgency in the market and vendors who need to sell may need to adjust their expectations further
Lucien Cook, Head of Residential Research at Savills: “Ahead of the vote to leave the EU, there were signs of a market bottoming following the adjustment triggered by the December 2014 stamp duty reform, and some locations had started to show price growth, but increased political and economic uncertainty has weakened fragile buyer sentiment.
“Where vendors have realistic price expectations, which reflect these falls, sales are proceeding. But there is a lack of urgency in the market and vendors who need to sell may need to adjust their expectations further. “It has been widely reported that the currency advantage is leading to an uptick in dollar denominated and international buyer activity. In our experience, the currency play is helping to underpin sales, by partially offsetting high stamp duty costs, but buyers still need the reassurance that they are buying the right property at the right price.
“Stamp duty reform has reduced speculative buying, with the market now much more the preserve of needs-based buyers. However, prime London continues to be considered a relatively secure investment asset in a global context and this too is underpinning buying decisions for those taking a mid to long term view.”