Financial Reporters: 46% of homes in prime London now worth over 1m
Thu 25 Apr 2013
Average values rose by 3.6% in the quarter, compared to a 2.2% rise in Q1 2012, according to the Marsh & Parsons London Prime Market Monitor.Growth in Prime Central London was slower than Prime London as a whole, with an increase of 2% compared to 2.4% in Q1 2012.This could be an effect of increased taxation on higher value properties a larger volume of which fall within Prime Central London areas including the introduction of a 7% stamp duty for properties over 2 million, rising to 15% if purchased through a company.Prime London annual price growth stood at 12.8% in the first quarter. Prime London has now experienced consistently higher quarterly growth than Prime Central London for the past three quarters, as the ongoing supply shortage fails to satisfy demand.In terms of property types, the largest quarterly growth was a 5% lift in the value of an average two-bedroom home in Prime London. The lowest quarterly growth recorded was just 1% for the average growth in value of both three and four-bedroom properties in Prime Central London. As the average value of these properties currently stands above the 2 million mark, this could reflect a decreaseddemand for properties in this price range as potential buyers have tried to avoid the increased stamp duty.Aided by the Governments Funding for Lending scheme, conditions on the ground for many first-time buyers have improved, with this segment taking an increasing share of the purchasing activity over the last quarter. In Prime London, the percentage of first-time buyers has grown by 0.5% since the last quarter, and by 4% from the same quarter last year. In Prime Central London, the proportion of first-time buyers increased by 9% from the previous quarter.Overall there has been a steady decrease of cash buyers and an increase in the number of mortgage buyers across all parts of Prime London. The percentage of mortgage buyers in Prime London has increased by 10% from the previous year. This growth has been most noticeable in areas of Prime Central London, where the proportion of mortgage buyers has leapt up by 34% in the last quarter an increase of 7% from the previous year. This upwards trend continues to suggest that lending as a result of the Funding for Lending scheme is helping more buyers in the middle or higher ends of the market, than riskier first-time buyers seeking higher loan-to-value mortgages.While the value of properties in Prime Central London continues to far exceed those in Prime London, it is Non-Central Prime London which has experienced the most rapid price growth over both the past quarter and year. The value of property in Prime London overall has increased by 12.8% in the past year, as a shortage of supply in Prime Central London continues to push would-be buyers further afield.In March 2012, 54% of the Prime London properties worth 1m were located in Prime Central London locations. This figure has now fallen to 50% as a result of the buoyancy of Non-Central Prime London areas.Despite the introduction of the 7% stamp duty tax, the number of properties worth 2m or more has continued to increase. Currently, 19.3% of all homes in Prime London are worth 2m or more, up from 18.8% in December 2012 and 15.9% in March 2012.