The Wider Context

18 April 2016, by Sophie Chick

Prime central London property prices are set to plateau before a gradual return to growth

 

The outlook for Notting Hill needs to be considered in the context of the wider prime London market.

The sales market

In prime London, the stamp duty changes introduced in the 2014 Autumn Statement have had a bigger impact than many forecast as the effect was initially masked by the uncertainty in the run up to the General Election. However, the prime London housing market reacted relatively rationally to the changes, as prices adjusted in line with the stamp duty increase, or in the case of homes below £937k, decrease.

Further stamp duty changes were announced in the 2015 Autumn Statement, for buyers of “Additional Homes” (second homes and buy-to-let) causing further small price falls in markets with high concentrations of such buyers in the last quarter of 2015. In Notting Hill, more buyers are purchasing property to use as their main residence than across the wider prime central London area, meaning this additional tax should have less of an impact.

We expect prime central London property prices, including Notting Hill, to remain broadly flat through 2016 and most of 2017 followed by a gradual return to trend rates of price growth over the medium term supported by the fundamentals of wealth generation.

The rental market

The prime rental market in London is driven by the economy and employment opportunities, which are both forecast to continue improving over the next five years.

This will continue to draw more people to move to London. Notting Hill in particular is a popular choice for corporate relocators from overseas, moving to London for a few years.

Prime London rents depend on a careful balance of demand and supply. Some locations are finding that due to the high levels of new build stock coming to the rental market, rents are coming under pressure.

Notting Hill is not seeing high levels of development activity, but neighbouring White City and Paddington are. This means that landlords will need to keep their properties maintained in an immaculate condition to prevent tenants choosing new build properties in alternative locations.

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