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| Prime London house price growth slows Prime London values rose by an average of just 1.1 per cent in the second quarter, bringing year to date growth down to 4.9 per cent, according to the Savills quarterly prime London index. This is a significant slowdown from 2013 when prices rose by an average of 11.8 per cent. It brings prime London price growth into line with steadier levels of growth now being seen in the prime regional markets, which are still in the early stages of recovery as buyers begin to take advantage of the gap between London and regional values. Sub markets that have been the top performers since the nadir of early 2009 are now levelling off. Prime central London growth slowed to just 2.5 per cent in the first six months of this year and values now appear to have now plateaued (+ 0.4% in the Q2). The strongest growth is now being seen in the lower value core prime markets of Islington (prime north) and Canary Wharf and Wapping (prime east of City), reflecting confident amongst young financial sector employees and investor buyers targeting City based renters. Average values have risen 10.1 per cent year to date, which follows 13.3 per cent growth in 2013. "Successive changes to stamp duty and the wider tax regime have left some prime London markets looking fully valued and sensitive to shifts in both overseas and domestic buyer sentiment, " says Lucian Cook, Savills UK head of residential research. "These results suggest that 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. We now expect values to plateau in locations that have seen the steepest price rises as buyers apply the brakes on further increases for a period." 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 of no more than 1.0%, while in lower priced Marylebone, where prices average £1, 600 per square foot, values rose 3.5 per cent in the quarter. The predominantly domestic markets of prime southwest London, which beat all other prime markets to rise 14.0 per cent last year, have also slowed. In the face of buyer resistance to further price inflation and higher stock levels, year to date growth stands at just 4.4 per cent, having slowed to just 0.4 per cent in the past three months. "The prime London markets have all become more price sensitive, " says Cook. "Around one in five properties within our index actually recorded small price falls over the last three months, with the falls concentrated amongst higher value properties." This pattern is most evident in prime central London where homes worth over £10million fell by 1.5 per cent in the second quarter of 2014. This means that London's highest value homes have shown zero growth over the past year, albeit values remain 48.0 per cent above peak. Indeed, in prime central London, it is only homes priced under £2million that have continued to show growth, up 1.1 per cent in the quarter and 9.0 per cent year on year. Cook concludes: "New sellers entering the market should price for these new market conditions and a more cautious group of buyers." write your comments about the article :: © 2014 Construction News :: home page |