Two new reports points to prime central London market reaching bottom
All the latest evidence is pointing to the prime property market on central London turning a corner with price falls slowing and more activity at the top end of the sector.
In the fourth quarter of 2017 the upper end of the market showed signs of recovery and prices in the £10 million plus market remained stable for the first time in three years, according to the latest residential sales report from real estate firm JLL.
The report also shows that the number of sales in the £5 million plus market increased by 31% between the third and fourth quarters, although still from quite a low base while sales were 13% down year on year they were 11% higher compared with the third quarter of 2017.
Prices in the sub £2 million market also remained stable, the third consecutive quarter of no change and were 1.8% higher compared with a year earlier. The only segment of the market to see price falls in the final quarter of 2017 was the £5 million to £10 million market but the 0.4% decline was modest. By the end of 2017, average prices in prime central London were just 0.1% lower than a year earlier.
‘It is very positive that a number of high value sales took place during the final months of 2017. More encouraging is that these have included four and five storey houses in the core areas of Knightsbridge, Belgravia, Chelsea and Kensington and that buyers have been a mix of domestic and international,’ said Richard Barber, director of residential agency at JLL.
‘These are traits that have been lacking for much of 2017, and whilst these do not imply the market is set to return to more acceptable trading levels, they do at least signal a step in the right direction. The continued low pound may encourage more overseas buyers to consider re-entering the market now that the main phase of pricing realignment has past,’ he pointed out.
‘The New Year market will be crucial in setting the tone for the year ahead and whilst we are not expecting anywhere near the boom conditions of 2014, we do expect to see the ongoing trend of an acceleration in transaction volume,’ he added.
Meanwhile, the latest report covering the fourth quarter in central London from Douglas & Gordon is also positive with signs that the market is bottoming out and the report predicts that it could see a reversal of its fortune in 2018 taking growth back to long term trend values.
Residents and property investors are reaching a peak of Brexit uncertainty fatigue, and confidence is returning to the market, says the report, explaining that Brexit uncertainty and a botched general election made last year a difficult one across the board, but towards the end of the final quarter there was some degree of political agreement with Europe and a shift towards more positive post-Brexit scenario reporting.
The Budget also delivered some good news to first time buyers with the reduction of stamp duty on properties under £500,000 and with low forecasted GDP growth, the future of low interest rates looks likely to stay, the report suggests.
With other regions in the UK’s property market seeing a slowdown of growth in values, the yields in London, and its traditional security, are beginning to look attractive again and the report says smarter investors are beginning to look again, reminded of the global appeal of London.
‘The last couple of years has seen some of the heat taken out of the central London property market, putting it back towards its long term steady growth rate. Our highly localised index data and market insight is showing that confidence is returning and history will show this was a very good time to buy London property,’ said the firm’s chief executive officer James Evans.