Continued positive growth for Prime Central London

Contrary to various reports that Prime Central London (PCL) prices are falling, the Government’s latest statistics show average prices have increased 12.8% annually to reach a new high of £1,773,337. This is, in part, attributable to a few high value sales in the PCL ‘houses’ sector, notoriously volatile due to its tiny size and huge diversity. This quarter, 235 houses sold at an average price of £4.45 million, an 18% increase.

LCP anticipates that PCL growth will taper off for the next 6 months, given the high growth levels already seen. This will be compounded by normal seasonal price falls in Q4 and traditional market uncertainty before any general election, when transactions can fall by 15%.

Demonstrating the first signs of a slowdown, PCL transactions fell 9.5% quarter on quarter. However, annual transactions (at 6,368) are now at their highest level since 2007.

Greater London continues to perform well on all measures as average prices reach £548,040, 10.7% higher than last year. At 2.7%, the level of quarterly growth, however, is the lowest seen in 2014 after 4.9% and 7.6% increases in Q1 & Q2 respectively. A slowdown is also inevitable in Greater London, given these high growth rates seen and the prospect of mortgage caps and interest rate rises.

England and Wales has also shown a relatively positive picture in Q3 2014. Annual transactions reached 880,959, a 27.8% rise over the preceding year. This pips the long term average of 869,286 p.a. Average prices, excluding Greater London, have risen 4.4% over the year to reach £229,147. The overall national average now stands at £269,890.

A gentle recovery in the rental sector, with small units remaining the most hardworking.
 
Rental voids have continued to decrease this year, falling to an average of 14 days, down from 21 days in 2013. Gross yields now average 3.5%. One bedroom units benefit from the lowest average voids at 10 days and also achieve the highest weekly rents per square foot at an average of £1.05. There has been a paradigm shift amongst tenants who now demand immaculately presented flats. Demonstrating this, rents for newly renovated properties in PCL have increased 7.4% on average over the last year. Whilst re-lets are also showing more positive signs, rental increases are only averaging 2.8% over the last year. Landlords should therefore be open to upgrading and remedial works between tenancies to maximise yields and minimise voids.