The bulk of this increase was gained in the last three months, after a strong 6% quarterly rise increased the average value of one-bedroom properties by an extra £29,140. This follows three strong quarters of growth in the past year, contributing to a 14% annual growth – equivalent to £62,063 in a year.
The average price of a one-bedroom property in Prime London now stands at £502,139. In Prime Central London, covering the most expensive areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico, the average value of a one-bedroom property has risen to £583,036 – a 9% increase in the last year, equivalent to £48,703 in a year.
Peter Rollings, CEO of Marsh & Parsons, comments:
“With returns like these, it’s no surprise that people are queuing up to buy Prime London property. Competition for one-bedroom properties in particular is fierce. Spurred on by the rapidly improved availability of mortgages and low interest rates, first-time buyers are flooding the market in competition for the best properties in this price bracket.
“In addition, one-bedroom properties generate the best rental yields, making them a popular purchase for buy-to-let investors. We have noticed many young, would-be buyers adopting more European attitudes to renting, with many choosing to become long-term renters, rather than saving up for a deposit. As a result, the value of one-bedroom properties in Prime London is shooting up the scale.”
One-bedroom properties have risen in value at a faster rate than properties of other sizes in Prime London. The overall rate of growth in Prime London, reflecting all sizes of property combined, was 1.6% in the past quarter and 10.3% in the past year.
By comparison, two-bedroom properties have appreciated by 10% in the last year in Prime London, and by 7% in Prime Central London. Three-bedroom properties have appreciated by 12% in the last year on average across both Prime and Prime Central London.
In Prime London as a whole, property values have continued to rise, with prices climbing by 10.3% in the past year and by 1.6% in the last quarter.
However, for the first time in five quarters, the more expensive areas of Prime Central London have outpaced Prime London as a whole by experiencing a higher quarterly rate of growth. The rate of growth in Prime London was 1.6% in Q3, while in Prime Central London this figure was 1.7%.
The number of registered buyers has increased by 6% in the last quarter, but for the first time this year, there has also been an increase in the supply of property to the market. While the volume of supply remains at a historic low – there are still 17% fewer properties on the market than at the same time last year – the ratio of supply to demand is beginning to stabilise.
Peter Rollings continued:
“The ratio of supply and demand is the key factor which determines prices on the London property market. While interest rates remain low, Prime London property will continue to be seen as an attractive investment opportunity for both UK and overseas buyers, and prices will remain high.
However, rather than create a bubble, we may find that Help to Buy actually stabilises prices by encouraging first-time sellers to put their properties on the market and take their next step up the property ladder. For the past three quarters, a lack of available property has created a high premium for those on the market, but the gradual increase in supply, which we are beginning to see now, combined with the wide volume of property development taking place, may start to initiate more ‘normal’ market conditions.”
