The firm has been busy mining the Lonres data vaults, but hasn’t found much evidence of prices rising in the super prime sector lately, mainly because transaction volumes have been so low.
Richard Barber, Partner: “Amidst the hyperbole surrounding the prime central London market and the endless speculation regarding a ‘property bubble’, there is a rather more realistic and sobering story emerging.
“Undoubtedly, the market beneath £2 million has surged ahead, fuelled in some part by foreign investment. However, if one looks at the transaction levels within the prime central London postcodes in which we deal (SW1, SW3, SW5, SW7, SW10, W1K, W8), one can actually see a diminution in overall transaction levels within the postcodes. Broadly speaking, these postcodes represent Belgravia, Kensington and Chelsea, Earls Court, and Mayfair. Transactions are down from 504 in the first quarter of 2013 to 452 in the first quarter of 2014, a reduction of over 10%. These figures generally refer to the ‘second hand market’ and do not take into account many of the new development sales which have taken place.
“While values have increased and vendors’ expectations remain high, it is interesting to note that transaction levels above £2 million are exceptionally low so the evidence for rises in values in the super prime sector is, at best, patchy. For example, within SW10 (West Chelsea), although there have been 58 transactions under £2m in the last three months, there have only been four transactions above this watershed figure. Another strong illustration is within SW7, where there have been 35 transactions under £2m as against 57 in the first quarter of last year. Sales above £2m here remain static, with a total of only 17 transactions in the first three months of 2013 and 2014 combined.
“We have for some months been highlighting the strength of demand for laterally arranged flats and the relative lack of demand for houses arranged over 5-6 floors. This differential is accentuated within the sales transaction figures. Whereas in the first quarter of 2013, there were 107 house sales across the relevant postcodes, this year there have been only 92 within the same period.
“Of course, statistics can be interpreted in many ways, and the first quarter of any year will traditionally show lower transaction levels. As we move in to a spring market and the traditional house selling season, we will undoubtedly see more house sales and this is reflected within our current pipeline. The overall trend, though, is that the demand for property beneath £2 million is still exceptional and will remain so, whilst the current SDLT system continues to penalise transactions at even marginally higher values. The threat of ‘mansion tax’ and the ability to extend into much maligned basement space also continues to threaten transaction levels at the top of the market.”