By Marianna Hunt
Prices for prime homes in the capital have slumped, with supply soaring and fewer buyers around.
Prices of London’s most expensive homes are at the lowest level in seven years, with some buyers able to strike bargains not seen since the financial crisis.
In October values of property sold in the priciest postcodes of the capital fell by 3.3pc compared with the same month last year, according to LonRes, a data provider. This means that prices per square foot for the capital’s most exclusive homes are now the lowest they have been since 2013.
These drops in the capital buck the national trend, as Halifax bank’s latest index suggests average house prices have risen by about 7.5pc in a year in the recent “mini-boom”.
The number of properties on the market in prime central London is up by 68pc compared with last year, LonRes found. However, sales agreed have not risen in tandem, as international buyers have been unable to visit during the pandemic.
As a result, bargains are available the likes of which have not been seen since the financial crisis, said Camilla Dell of Black Brick, a buying agent. “This time, it’s even better because there are fewer buyers around to compete with. There are not many moments I’ve seen where you can get these kinds of deals. ”
It is in the city’s “golden postcodes” – traditionally prized spots such as South Kensington, Knightsbridge and Belgravia – where you can find the best bargains, she added.
“These areas have been hard hit by coronavirus. Firstly because they’re traditionally dominated by overseas buyers.
“Secondly because properties here are mostly flats without outdoor space, which is not what domestic buyers are after at the moment,” she added. “One agent who is trying to sell a £40m home in Belgravia said it was like tumbleweed.”
In Knightsbridge and Belgravia, prime property prices are currently 16pc lower than they were at their peak in 2014, according to private bank Coutts’ London luxury property index. It uses data from LonRes, which found that the cost of property in the area is now £1,886 per sq ft – the lowest it has been since 2011.
In South Kensington prices are down by 16pc from their peak, the lowest they have been since 2012.
“Fulham and Earl’s Court have been particularly hard hit this year because they have lots of new-builds, which traditionally get snapped up by international buyers,” Ms Dell said. Prices here are down by 19.2pc compared with peak levels.
London’s leafy suburbs have fared better thanks to their larger homes and bigger gardens. In Wimbledon, Richmond, Putney and Barnes prime property prices have risen by about 4pc in the past year, according to Coutts. Homes in these areas take on average 135 days to sell – a month faster than the rest of the prime London market. As a result the premium buyers pay for a luxury property in the city centre compared with its outskirts has dropped from 91pc in 2019 to 82pc this year.
Falling demand in SW and W postcodes has opened the way for bargains. Ms Dell recently secured a two-bedroom apartment in Ebury Square, Belgravia, for a client for £3.32m – with a discount of £1m (22pc) off its original asking price.
Jeremy Gee of Beauchamp Estates, a property firm, said he was currently trying to find a buyer for an off-market property in central London that had a £10m discount. “It is 16,000sq ft and would normally cost about £40m but the buyer is only asking £30m,” he said.
Savills, the estate agency, has predicted that prime property values in the capital will jump 17.5pc by 2024, ending a long downward trend.
The firm’s Lucian Cook said: “The data suggests that the top end of the market remains poised for recovery as soon as international travel resumes and London’s streets regain their normal buzz. The successful development and distribution of a vaccine against Covid-19 is an important part of this.”
While some are worried that the city will lose some of its shine following Brexit and the introduction of an extra 2pc stamp duty surcharge for overseas buyers in April, others are more confident.
“London isn’t the cheapest city for property taxes, but it’s far from the most expensive either,” Mr Gee said. Buyers in London do not have to pay holding taxes on their properties, as they do in New York, Madrid or Paris. “There’s a lot of pent-up demand from international buyers, and extra stamp duty won’t put them off,” he added.