London’s high-end real estate market shows glimpses of recovery as a second consecutive quarter of price increases followed years of declining or flattening values, according to new data.
Prices for expensive London homes rose 1.4 per cent year-on-year to September, including a 0.7 per cent increase over the past three-month period, according to real estate agent Savills.
“The survey is the latest evidence that the central London market has bound and is growing for the first time since September 2014, despite the absence of international buyers,” said Savills, who defines prime as the top 5 to 10 per cent of homes by value in a given district.
Compared to the price increase in the general market in other parts of the UK, the increase is modest. Nationwide Thursday said annual growth in UK house prices was 10 per cent in September, down from 11 per cent the previous month.
The market for first-class properties in the capital stretches from central London – Kensington, Chelsea and Westminster – to top properties in more remote districts such as Chiswick, Wimbledon, Hackney, Clapham and Hampstead. Average values in the Savills index for central London are £ 4.5 million. or £ 2.5 million. across prime London as a whole.
This market has been stagnant since the end of 2014, when changes in stamp duty land tax increased the cost of a purchase at the top end. Uncertainty about Brexit increased the feeling of caution among wealthy buyers, which led to prices in central central London falling by almost 20 per cent between 2014 and 2018.
Last year, pandemic travel restrictions dampened demand from overseas buyers, while homework shifted the demand balance to larger homes outside city centers in the “space race.”
But Savills said larger homes with gardens in London had increasingly benefited from the same effect, and it accelerated as the return to the office worked. In prime districts in the wider London area, six- or more-bedroom homes rose by an annual average of 6.2 per cent, up 5.3 per cent for five-bedroom homes.
The effect was strongest in the south-western areas of the capital preferred by families, such as Chiswick and Clapham, where price growth for the largest homes hit 8.9 per cent, comparable to increases elsewhere in the UK.
The gradual return to the office had begun to change the priorities of buyers in the capital, says Lucian Cook, research director for housing in Savills. “In our buyer survey in September, proximity to the subway or train station took over from nearby to a park or green area at the top of buyers’ wish lists.”
Tom Bill, head of British real estate research for real estate agent Knight Frank, said central London had been in a “stock pattern” for the past six months, but there were changes with the return of international buyers and “opportunistic buyers”. Because the school year had now begun, families would have already taken their steps, he said, leading to more purchases of individuals over the next few months.
“There is an upward momentum in London that is long overdue. It is strenuous to get started, but we are in a bit of a temporary period at the moment, ”said Bill.
Camilla Dell, founder of Mayfair-based buying agent Black Brick, said the central London real estate market “finally showed signs of life”, especially with easing travel restrictions.
“It started in August when we suddenly got a lot of Middle Eastern customers coming by,” Dell said, adding that more customers came at the beginning of the school season, with potential buyers coming mainly from North America, West Africa and the Middle East.
Demand for apartments that fell away during the lockdown may also be on track, with prices for first-class London apartments growing by 0.6 per cent on the year in the Savills data – the first positive year since 2014. Dell said that by eight clients she took on in the first two weeks of September, all but one wanted an apartment in central London.
“There is definitely more interest in apartments and London pied-à-terre than there was 14 months ago,” Bill said. “It’s starting to change.”