Investors continue to target prime central market

The proportion of Prime Central London house purchases made by investors has jumped 8% year-on-year. This spike means that investors now account for more than two-fifths (42%) of all Prime Central London property sales in the past quarter, increasing from 34% a year ago.  Across Prime London as a whole, they are also the most common type of buyer.
 
At the same time, there has been an upswing in foreign nationality buyers in Prime Central London, making up over a third (34%) of all sales in Q2 2015, up from 30% in Q2 2014 although this has much to do with European buyers of all nationalities coming to live and work in London.
 
Prime Central areas command a significantly higher price per square foot than properties elsewhere in the capital – with the average square foot of property in central locations such as Holland Park, Notting Hill or Kensington and Chelsea valued at £1,516, 27% higher than the capital-wide average. In contrast, overall in Prime London, the typical price per square foot stands at £1,192.
 
Peter Rollings, CEO of Marsh & Parsons, comments: “The excellent capital appreciation and secure nature of property in prestigious central addresses of Kensington, Chelsea and Holland Park have long made them appealing particularly to the investor – but it’s encouraging that we’ve seen such a rise recently.  Investors are a good gauge of the overall health of the London market. If there was any cause for concern about the future property market, investors would be upping sticks and moving elsewhere. But that fact they are still putting down roots in the capital shows how fertile current conditions are. While there may not be much action to see at the moment, prices are still growing, and the foundations for fruitful capital returns are strong.“

Prime London Property Price Movements

House price growth turned a corner and started to improve again during Q2, with Prime London property values increasing by 0.8% in the three months to June 2015. This is the first quarterly price increase since September 2014, and compares to a 0.6% drop in the first quarter of the year. Outer Prime areas of the capital have seen the strongest resurgence in price growth, experiencing a 1% boost to values during the course of Q2.

House price growth is still much slower than last year, and on an annual basis, values have dipped across the Prime London property market. But it is important to place this into a longer-term context, and since June 2013 the value of the average Prime London home has increased by 12.1%.

Property hotspots

For the first time since September 2013, it is an area in Prime Central London which comes out on top in terms of price growth. Average property prices in Pimlico have risen in value by £180 a day in the past twelve months, climbing 5% year-on-year.  Over the past two years, more affordable Outer Prime areas such as Brook Green and Balham have experienced the steepest price rises across the capital. 

In terms of property type, family-sized homes have experienced the biggest bump in price over the past three months with four-bed properties across Prime London appreciating by 1.3% over the quarter.

Supply and demand

In the three months to June 2014, demand for Prime London homes has accelerated and the number of registered buyers has climbed 17%. Over the same period, there has been a 10% boost in the supply of properties available on the market.

This mismatch means that there was an average of 12 buyers for every available property in June 2015 and this competition was higher in central areas, with 13 buyers for every property on the market. 

Peter Rollings concludes: “For many London buyers, the escalation of property transaction taxes at the top tiers of the market will have soured the taste somewhat.  This will suppress some appetite in the market, and dilute the level of house price growth in the capital until buyers get used to this increased cost. The London market is likely to play second-fiddle to the rest of the country in the coming months, as it has more fine-tuning to do at the highest levels to sync with the new Stamp Duty system. We may have dodged the Mansion Tax bullet, but there’s no denying that London has been struck by significant regulatory changes, and given its position at the frontline of the UK’s prime property market, is having to absorb the impact.”