The most established core prime central locations such as Mayfair, Knightsbridge, Belgravia and Chelsea, where average values are in the £2,100 to £2,400 per square foot, have all recorded quarterly growth below 1%, while in lower priced Marylebone, where prices average £1,600 per square foot, values rose 3.5% in the quarter.
The data from real estate firm Savills also shows that at the very top end of the market, homes worth over £10 million fell by 1.5% in the second quarter of 2014, meaning that London’s highest value homes saw zero growth on an annual basis albeit values remain 48.0% above peak.
This division is also reflected in sales activity, with sales between £5 million and £10 million in the first six months of the year up by 7% on the same period in 2013 but sales over £10 million down by 10% over the same period.
The strongest growth is now being seen in the lower value core prime markets of Islington and Canary Wharf and Wapping, reflecting confidence amongst young financial sector employees and investor buyers targeting City based renters.
For example, average values in the prime East of City markets have risen 10.1% year to date, which follows 13.3% growth in 2013.
The domestic markets of prime south west London, which beat all other prime markets to rise 14% last year, have also slowed. The report says that in the face of buyer resistance to further price inflation and higher stock levels, year to date growth stands at 4.4%, having slowed to just 0.4% in the past three months.
Across the prime London index, approximately one in four properties recorded small price falls over the last three months.’ This suggests the spectre of interest rate rises, and in some parts of the market more constrained mortgage lending, is beginning to impact on buyer sentiment and constrain prices even in markets rich in equity,’ the report explains.
‘With an election approaching and the taxation of high value property still on the political agenda we expect values to plateau in locations that have seen the steepest price rises as buyers apply the brakes on further increases for a period. New sellers entering the market should price for these new market conditions and a more cautious group of buyers,’ it adds.
