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The latest real estate market in London is showing sharp recovery, following a second consecutive quarter of price increases following years of declining or downward values, according to new data.
Prices for expensive homes in London rose 1.4 per cent in the year to September, including a 0.7 per cent rise in the latest three-month period, according to real estate agent Savills.
‘Research is the latest evidence that London’s key central market has reached a low point growth for the first time since September 2014, despite the absence of international buyers, ”said Savills, who defines fine as the top 5 to 10 percent of homes by value in a given district.
Compared to the rise in prices seen in the mainstream market in other parts of the UK, the rise is modest. Nationwide Thursday said annually growth in UK house prices were 10 per cent in September, compared with 11 per cent the previous month.
The capital’s excellent property market ranges from major central London – Kensington, Chelsea and Westminster – to top properties in remote districts such as Chiswick, Wimbledon, Hackney, Clapham and Hampstead. Average values in the Savills index for prime central London are £ 4.5 million; or £ 2.5 million across London.
This market has been let down since the end of 2014 when changes to land tax on stamp duty increased the cost of a purchase to the top end. Uncertainty about Brexit exacerbated the feeling of caution among affluent buyers, which led to prices in central London falling by almost 20 per cent between 2014 and 2018.
Last year, pandemic travel restrictions weakened demand of overseas buyers, while homework shifted the demand balance to larger homes outside city centers in the ‘race for space’.
But Savills said larger homes with gardens in London are increasingly benefiting from the same effect, accelerating as return to office gains momentum. In prime districts in the greater London area, homes with six or more bedrooms rose on average by an annual 6.2 per cent, up 5.3 per cent for houses with five bedrooms.
The effect was strongest in the southwestern areas of the capital benefiting families, such as Chiswick and Clapham, where price growth for the largest homes reached 8.9 per cent, comparable to increases elsewhere in the UK.
The gradual return to the office has begun to change the priorities of buyers in the capital, says Lucian Cook, director of residential research at Savills. “In our September buyer survey, the proximity of the subway or train station took over from the proximity of a park or green space to the top of buyers’ wish lists.”
Tom Bill, head of the British residential research for real estate agent Knight Frank, said the central part of London had been in a ‘hold pattern’ for the past six months, but there was change coming with the return of international buyers and ‘opportunistic’ buyers’. Because the school year has now begun, families will have already decided, it has led to more purchases by individuals in the coming months.
‘There is an upward momentum in the London prime that was long overdue. “We are working on the leash to get started, but we are currently in an interim period,” Bill said.
Camilla Dell, founder of Mayfair-based buying agent Black Brick, said the main real estate market in central London “is finally showing signs of life”, especially with the easing of travel restrictions.
“It started in August when suddenly a lot of customers came to the Middle East,” Dell said, adding that more customers arrived at the beginning of the school term, with prospective buyers coming mainly from North America, West Africa and the Middle East.
Demand for apartments, which fell off during the constraint, may also be on the rise, with central London apartment prices up 0.6 per cent year-on-year in the Savills data – the first positive year-on-year figure since 2014. Dell says that of eight clients she took on in the first two weeks of September, all but one wanted an apartment in key central London.
“There is definitely more interest in flats and the London pied-à-terre than there was 14 months ago,” Bill said. “It’s starting to change.”