Property prices in prime central London fell just 0.7% in year to January 2018
Average property prices in the prime central London market fell by 0.7% in the year to January 2018 adding to evidence that the annual declines recorded over the last 20 months have bottomed out.
Indeed, 2017 may have been a turning point for the market as average prices for homes valued at £10 million or more recorded a 0.2% rise in the year to January, the first increase recorded in this price bracket for almost two years.
The analysis from international real estate firm Knight Frank also reveals improved sales activity with volumes for properties valued between £5 million and £10 million increased by 14.3%.
Tom Bill, head of London residential research at Knight Frank, pointed out that the relatively modest nature of the annual price fall in January was smaller than the 6.7% fall registered in January 2017, suggesting that current pricing movements could be the prelude to a more stabilised market.
‘A growing number of new prospective buyers relative to the number of new properties placed on the market typically denotes the potential for upwards pressure on pricing. After three successive declines, the ratio of new buyers to new properties rose in 2017 and price declines became more modest,’ he explained.
However, while the underlying trend is a stabilising market, there is little sense of uniformity across different price bands and geographies. Higher rates of stamp duty had an earlier and more pronounced impact on the upper end of the market, which led to a quicker response in terms of asking price adjustments.
Indeed, Bill also pointed out that as a result, higher value properties continue to perform comparatively more strongly than lower value properties across prime central London.
Average prices for homes valued at £10 million or more recorded a 0.2% rise in the year to January, the first increase recorded in this price bracket for almost two years. Meanwhile, average prices between £5 million and £10 million rose on an annual basis for the third consecutive month.
Underlining the relatively stronger performance of higher value properties, the largest rise in sales volumes by price band was 14.3% for properties valued between £5 million and £10 million.
But there are regional variances as markets adapt to the changed tax landscape in different ways. For example, the total value of transactions in Chelsea in the last quarter of 2017 was the highest recorded in three years. Bill said this suggests vendors have adjusted asking prices more readily in a market where demand was initially weaker after stamp duty.
Average prices in Chelsea fell 1.9% in the year to January 2018, which compares to double digit declines 12 months ago and elsewhere, positive annual growth has returned to markets where demand has been supported by factors that include the presence of premium new build developments.
Average prices in Mayfair grew 0.8% in the year to January and an increase of 0.7% was recorded in Kensington. Meanwhile, average prices in Marylebone rose 5.5%, which was the largest increase recorded in prime central London.
‘This demonstrates how pricing is heavily influenced by each neighbourhood’s changing characteristics, including its new build pipeline and public realm regeneration. Overall, transaction levels are showing signs of stabilisation,’ Bill added.