There are further signs of stability in the prime property market in central London but values are still 3.5% below a year ago, the latest research shows.
House prices across prime London continued to soften over the last quarter of 2017 but in the central markets values may be bottoming out, following three years of price falls, according to the market in minutes report from real estate firm Savills.
However, the analysis points out that other more domestic parts of the prime London market are under pressure from fragile buyer sentiment.
Outside of prime central London, where the average value is just below £2 million, prices fell 1.2% over the fourth quarter of 2017 and are now 5.8% down from their peak in September 2014. But price falls at the top end of the market are more in line with central London, with properties over £2 million now 10.2% below their 2014 level.
‘Buyers in these more domestic markets are now feeling the constraints of the mortgage market review, as well as uncertainty around the Brexit process and its potential impact on employment, particularly in the financial and business services sector,’ the report says.
It also reveals that for the first time since June 2012, annual price falls in prime South West London have exceeded those in prime central London. Values in central London slipped by a marginal 0.9% in the final quarter of 2017, with annual price falls of 4%.
Across the more domestic prime South West London, values fell by an average of 1.6% in the last three months of 2017 and 4.2% over the year, making it the capital’s weakest prime market segment.
It explains that the prime central London housing market appears to be ahead of the curve in adjusting to current market conditions. Values are, on average, 15.9% below their 2014 peak, ahead of the first significant stamp duty increase. However, the rate of price falls has slowed and values are now finding a level.
In prime South West London, the falls have been less than half those seen in prime central London. Fulham, the market that traditionally behaves more in line with central London than the rest of South West London, has recorded the steepest falls in this submarket. Prices fell by 4.6% in 2017 and are down 14.4% on the 2014 peak, in line with locations such as Knightsbridge and Holland Park.
This means average values in Fulham, which passed the £1,000 per square foot mark in 2013, have now fallen back to £890. This is just below the £910 prime Battersea average and well below Chelsea’s £1,600. This repositions Fulham as a value location for those looking to make their equity stretch further than in prime central London.
‘The prime central London market may be bottoming out, but we don’t expect a return to growth until there’s greater clarity on the Brexit process. Economic uncertainty means the market will remain discretionary, while international buyers will be reluctant to take advantage of the currency play given the high tax environment,’ the report says.
‘Our forecasts anticipate it will be two years before we see a bounce in values. With continued weakness in other prime London markets, we forecast small falls in 2018. These markets are more dependent on domestic wealth generation and access to borrowing than prime central London. As such, our forecasts are for modest house price growth over the next five years,’ it adds.
Source: www.propertywire.com
