By James Pickford
London’s high-end property market is showing glimmers of recovery as a second consecutive quarter of price increases followed years of falling or flatlining values, according to new data.
Prices for expensive London homes rose by 1.4 per cent in the year to September, including a rise of 0.7 per cent in the latest three-month period, according to estate agent Savills. “The research is the latest evidence that the prime central London market has bottomed out and is growing for the first time since September 2014, despite the absence of international buyers,” said Savills, which defines prime as the top 5 to 10 per cent of homes by value in a given district. Compared with the surge in prices seen in the mainstream market in other parts of the UK, the rise is modest.
Nationwide on Thursday said annual growth in UK house prices was 10 per cent in September, down from 11 per cent the previous month. The market for prime property in the capital extends from prime central London — Kensington, Chelsea and Westminster — to top properties in more distant districts such as Chiswick, Wimbledon, Hackney, Clapham and Hampstead.
Average values in the Savills index for prime central London are £4.5m; or £2.5m across prime London as a whole. This market has been in the doldrums since the end of 2014, when changes to stamp duty land tax raised the cost of a purchase at the top end. Uncertainty over Brexit added to the sense of caution among wealthy buyers, leading prices in prime central London to fall by nearly 20 per cent between 2014 and 2018.
Last year, pandemic travel restrictions stifled demand from overseas buyers, while homeworking shifted the balance of demand to larger homes outside city centres in the “race for space”. But Savills said larger homes with gardens in London had increasingly benefited from the same effect, and this was accelerating as the return to office working gathered momentum.
In prime districts across the wider London area, homes with six or more bedrooms rose by an annual 6.2 per cent on average, with a 5.3 per cent rise for five bedroom homes. The effect was strongest in south-west areas of the capital favoured by families, such as Chiswick and Clapham, where price growth for the largest homes hit 8.9 per cent, comparable with rises elsewhere in the UK.
The gradual return to the office had started to change the priorities of buyers in the capital, said Lucian Cook, residential research director at Savills. “In our September buyer survey proximity to the Tube or train station took over from proximity to a park or green space at the top of buyers’ wish lists.” Tom Bill, head of UK residential research for estate agent Knight Frank, said prime central London had been in a “holding pattern” for the past six months, but change was afoot with the return of international buyers and “opportunistic purchasers”. Because the school year had now started, families will already have made their move, he said, leading to more purchasing by individuals over the next few months. “There’s an upwards momentum in London prime that’s long overdue. It’s straining at the leash to get going but we’re in a bit of an interim period at the moment,” Bill said.
Camilla Dell, founder of Mayfair-based buying agent Black Brick, said the prime central London property market was “finally showing signs of life”, particularly with the easing of travel restrictions. “It started in August when we suddenly had a lot of Middle Eastern clients coming over,” said Dell, adding that more clients arrived at the beginning of the school term, with prospective buyers coming mainly from North America, West Africa and the Middle East. Demand for apartments, which fell away during lockdown, may also be on the turn, with prices for prime central London flats growing by 0.6 per cent on the year in the Savills data — the first positive annual figure since 2014. Dell said that of eight clients she took on in the first two weeks of September, all but one wanted an apartment in prime central London. “There’s definitely more interest in apartments and the London pied-à-terre than there was 14 months ago,” said Bill. “That’s starting to change.”