House price growth across the sector slowed to 0.5% from 3.1% in the previous quarter, according to the latest London Property Monitor from estate agent Marsh & Parsons.
The data also shows that the ratio of buyers per property dropped to 12 in September, as supply soared 13% in three months.
However, one and two bedroom homes in the outer prime London sector outperformed the rest of the city in annual growth stakes, up 19% in past year
Overall, 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 capita.
The report suggests that 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.
‘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 pit stop in the long term growth and sustainability of the market,’ said Peter Rollings, chief executive officer of Marsh & Parsons.
‘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,’ he explained.
He pointed out that 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.
He believes that in the run up to the general election next May caution will be exercised by many home owners and would be investors, as high end property is marked out as a key battleground for politians.
‘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 as across the capital it is tricky to find a home big enough for your average 2.4 family without a million pound price tag,’ added Rollings.
The agent believes that 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% 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 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.
‘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,’ said Rollings.
‘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,’ he concluded.
