There were early signs of recovery in the market for London’s most expensive addresses in the final quarter of 2019, according to Savills.
Despite 83 per cent of Savills London agents reporting that the general election had impacted the market, prices of prime property in the capital showed growth in the final three months of 2019, the first quarterly growth in four years.
A marginal increase in prices of 0.1 per cent, meant that annual price falls which stood at -3.2 per cent at the end of 2018 had reduced to just -0.5 per cent.
“This is a stronger year end for prime London than we had been anticipating given the levels of political and economic uncertainty, and reflects a narrowing of buyer and seller expectations,” says Lucian Cook, head of residential research at Savills.
In prime central London, a bottoming out of prices has coincided with an increase in the volume of sales over £5m that were already 33 per cent up on December 2018 with 10 days of December 2019 remaining.
But the strongest performing markets have been those of prime South West London, where prices have risen by +1.9 per cent over the course of the year. This has been driven by the markets of Wandsworth, Fulham and Clapham, in particular. In each case, annual price growth has exceeded 5 per cent, as needs-based buyers have returned to the market, at a time when the amount of available stock has been low.
In prime central London the best performing market has been that of Notting Hill where values ended the year up 1.4 per cent.
Meanwhile, in the £10m+ super prime market prices have held firm in each of the past two quarters, meaning that year on year they are down by only -0.7 per cent. By contrast values fell by -7.3 per cent in the year after the EU referendum in this part of the market, contributing to the fact that they remain 21.8 per cent below their 2014 peak.
|
|
Prime Central London |
Outer Prime London |
|
Quarterly growth |
0.0% |
0.2% |
|
Annual growth, 2019 |
-1.8% |
0.0% |
|
Annual growth, 2018 |
-4.2% |
-2.8% |
|
Since 2014 peak |
-20.5% |
-8.4% |
Source: Savills prime London index, Q4 2019
“In central London the highly discretionary super prime market has historically been the first to fall and the first to rise again,” said Cook. “Prime central London prices have looked good value both in a historical and global context for some time, particularly for dollar buyers, but the recent experience at the top end of the market suggests that we are now at a turning point.
“However, 2020 will not be without its challenges as the Brexit deal is negotiated, so we are not forecasting a significant bounce in values until 2021.”
Savills forecasts that prime central London values will rise by 3.0 per cent in 2020 and a total of 20.5 per cent over the next five years.
Other prime London locations, where median values stand at around £1.2m, are more dependent on domestic wealth generation and more susceptible to interest rate rises. Brexit-related uncertainty is expected to cap growth at an average of 1.0 per cent in 2020, with five-year growth totalling 11.5 per cent.