Homes in prime central London saw the biggest rise in value during the first quarter of 2015, as the centre starts to outperform outer prime parts of the capital for first time since June 2013.
Buyers now pay a 34% price premium to live in prime central areas like Kensington and Chelsea, according to estate agent Marsh & Parsons’ latest London Property Monitor.
Historically, listing prices in the most affluent prime central areas of London had been accelerating away from values in the rest of the capital, due to consistently higher demand from overseas and domestic buyers keen to live in the most famous London locations.
However, over the past two years, areas such as Brook Green and Balham have experienced some of the steepest price rises across the capital, according to the firm, but this looks to have been a short term phenomenon.
While outer prime house prices have fallen 1.8% in the past three months, there has been a resurgence in price growth in prestigious prime central London with values up 0.3% throughout the last quarter.
This is the first time in over a year that price rises in exclusive central areas like Pimlico and Kensington have overtaken the growth in more affordable areas like Balham, and this is a trend that Marsh & Parsons expect to continue throughout this year.
As a result of this turnaround, the price premium paid for Prime London listing has risen for the first time in 15 months, and is now back in line with last year. Buyers can currently expect to pay a 34% premium to live in central locations.
‘Balham and Brook Green have been putting on the most astonishing performance recently, with an eye catching spurt of growth in 2014. In the long run, the traditional listing stalwarts of Kensington, Chelsea and Holland Park are proving they have the stamina to withstand a wider market slowdown,’ said Peter Rollings, chief executive officer of Marsh & Parsons.
‘While the market slows in other parts of the London housing market, the enduring appeal of the most desirable prime central postcodes has ensured growth ticks on. We believe this trend is set to continue in the next 12 months, with prime central areas outperforming outer prime areas for the first time in more than two years,’ he explained.
As growth at the higher end of the market continues momentum, the proportion of million-pound listings in prime central London has risen 3% in the past quarter, to stand at 67% of all homes.
With the average house price currently standing at £2,080,742 in these areas, 38% of listings in prime central London are now worth £2 million or more, highlighting the implications of any mansion tax on the housing market in these parts of capital. In addition, some 22% of prime central London listings surpass the £3 million threshold.
The report also shows that 49% of all prime central purchases over the past three months were made by investors, the highest proportion on record, up from 30% a year ago. This corresponds with an uptick in foreign buyers, with the proportion of purchases made by overseas and foreign nationality buyers reaching 30% over the past three months, up from 21% a year ago.
Popular with corporate lettings and renters from overseas, it is also average rents in prime central London that have increased at the fastest quarterly rate, rising 2.6% in the first quarter of 2015 compared to just 1.3% rent growth in outer prime locations over the same period. This takes the cost of renting in prime central parts of the capital to £712 per week on average.
It is four bedroom family homes in exclusive central locations which have witnessed the strongest annual rent growth, with typical rents climbing 9% in the past year.
‘It’s not just in terms of price growth where prime central London is asserting its dominance over the rest of the city. Demand for high end homes to let has been partly driven by the current political uncertainty,’ said Rollings.
‘Those hesitating to put down firm roots until questions of mansion tax and listing regulation are clarified are relying on the private rented sector in the short term, especially those families relocating from overseas,’ he added.
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Source: Property News Spain