The average sale price in prime central London between June and August 2014 was £4.7 million, up from £3.7 million in the preceding three-month period.
The 27% increase underlines how a growing group of vendors are adjusting to the fact demand is cooling, the result of uncertainty surrounding a future interest rate rise and the outcome of next May’s general election.
As asking prices have become more realistic, more sales have been achieved in higher price brackets. It is particularly true for property recently put on the market, where vendors are typically more attuned to current supply and demand dynamics. Some sellers are also motivated by a desire to act before the election.
The result was a 17% increase in the number of sales above £5 million between January and August compared to the same period in 2013. That compared to a 7% rise across all price brackets.
This process of self-correction in the sales market, which comes against the background of slowing growth in prime central London, demonstrates the resilience of demand.
Annual growth was 7.7% in August after a monthly increase of 0.3%, which matched the rise in July. Monthly growth has not been as low for two consecutive months since a period four years ago in 2010 when concerns were intensifying over the euro zone sovereign debt crisis.
The increase over the three months to August was 1.4%, which is the lowest since January 2013. It suggests growth of 4.3% recorded in the six months to June is unlikely to be replicated in the second half of the year.
Though fears over the future of the euro zone have receded, a faltering economic recovery in the region has seen the re-emergence of safe-haven inflows into London property. Italians were the biggest group of overseas buyers between January and August, accounting for 6%, followed by French (4.1%) and Russians buyers (3.8%).
Italy’s economy has experienced a triple-dip recession and Italian buyers have historically been active in London, a relationship potentially bolstered by Fiat’s decision to move its headquarters from Turin to London earlier this year.
