Following a robust 11.4% climb in Prime London property values over the past 12 months, equivalent to £163,973, there has been a sharp drop in the rate of quarterly price growth across the capital, and prices are predicted to flatten until the end of the year. The average Prime London property has risen 0.5% in value over the course of Q3 2014, less than a sixth of the 3.1% rate witnessed in the previous quarter as growth tails off into a more sustainable trajectory than at the start of the year.
House price rises have been steadied by rising supply of Prime London property on the market, up 13% in the last three months. This has cooled the level of competition in the market and the number of registered buyers per available property in Prime London has fallen from 24 at the start of 2014 to 12 in September.
Peter Rollings, CEO of Marsh & Parsons, comments: “We’ve reached a plateau in the course of house price growth, and the path paved out for London property prices for the rest of 2014 looks to be levelling off. This isn’t terminal, but just a necessary pitstop in the long-term growth and sustainability of the market. And it doesn’t mean we’re in for a quiet winter either. Sales will continue, albeit at a more ‘normal’ level, as buyers revel in the greater choice on offer, and without the frenetic competition many faced at the start of the year. With more realistic pricing sellers are prospering too, and on average 98% of the asking price is currently being achieved on properties sold.
In the hubbub surrounding the property market recently, seasonal patterns have been lost in translation. The majority of house price growth typically falls in the first half of the year, so this autumnal re-calibration is nothing new. Price growth may have paused to catch its breath, but come January we expect the heartbeat of the property market to quicken again as growth awakens for another healthy year.”
But as thoughts fast-forward to May and electioneering ramps up, caution will be exercised by many homeowners and would-be investors, as high-end property is marked out as a key battleground. Wading in with a ‘mansion tax’ threatens to douse the growth at the top tiers of the market, and in London especially, thousands of ordinary families would get swept up in its wake. Packaging it as a levy on ‘mansions’ is misleading - across the capital, it is tricky to find a home big enough for your average 2.4 family without a million pound price tag.”
There are still strong capital gains to be had across the capital, and house prices in Outer Prime London are climbing at the fastest pace – showing a 14.5% annual increase, compared to 9.0% in Prime Central areas. Brook Green, Clapham and Balham are streaking ahead of the pack in particular, with energetic annual house price growth of 22%, 20% and 17% respectively.
One- and two-bedroom properties in Outer Prime London have seen the steepest annual growth, appreciating in value by nearly a fifth (19%) in the past year. The average one-bedroom property in Outer Prime London has increased in price by £86,880 in the last year, equivalent to £1,670 a week – two and half times the median London salary, currently estimated to be £658 per week .
Peter Rollings concludes: “When it comes to watching house price growth play out, Outer Prime pockets are the city’s star performers. Savvy first-time buyers are looking for a cheaper route onto the property stage, and young families are casting their net wider to get more space for their buck. With the average price of property in Outer Prime areas only three-quarters that across Prime London overall, it’s becoming their first port of call. High demand has pushed price inflation in areas like Balham and Brook Green to a pace unrivalled elsewhere across the.”
