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Press Release: Healthier outlook for Prime London forecast as market stabilises

Fri 25 Jul 2014

  • Market stabilises as quarterly house price growth across Prime London cools to 3.1% in the three months to June 2014, down from 4.3% in the previous quarter
  • Increasing supply of Prime London property sees ratio of buyers per property drop from 24 in January to 16 in June and 13.1 in July
  • Price gap closing between Central and Outer parts of Prime London
  • UK investors account for majority (31%) of all Prime London purchases made during Q2 2014 reaching highest level on record

House price growth returns to a steadier, healthier rate as market stabilises, according to estate agent Marsh & Parsons latest London Property Monitor.

Quarterly house price growth slowed to 3.1% across Prime London, down from 4.3% in the first three months of the year. Over the course of Q2 2014, monthly house price growth in Prime London fell from 1.8% in April to just 0.4% June, as the market returns to more normal conditions.

At the very upper echelons of the market, this trend is even more acute as house price growth levels off. In the past year, there has only been just a 1% increase in the proportion of Prime London properties worth 3 million or more.

Over the last three months, supply of available of property in Prime London has jumped 26%, which has calmed the level of competition in the market, and stabilised house price rises. Overall, weve seen the number of registered buyers per property in Prime London fall from 24 in January to 16 in June.

Peter Rollings, CEO of Marsh & Parsons, comments: "After a frenetic start to the year, the pace of house price growth has slowed this quarter as the market stabilises and returns to more normal trading conditions. With more choice coming onto the market, sellers are able to find their next onward purchase and consider trading up. Calmer conditions in the market have meant buyers view purchasing London Prime property as a less daunting process than has been the case previously."


Prime London Property Price Movements

Average Value Quarterly Change Annual Change
All Prime London 1,589,720 3.1% 12.6%
Prime Central London 2,239,559 2.1% 10.5%
Outer Prime London 1,183,570 4.3% 15.3%


Property Type Breakdown

All Prime London Prime Central London Outer Prime London
One-bed 575,098 646,833 530,264
Two-bed 101,4944 1,446,204 745,406
Three-bed 173,9130 2,561,875 1,131,414
Four-bed 2,198,936 3,208,389 1,568,028


Outer areas outpaces the centre

Outer Prime London is outperforming central areas with the strongest house price growth across the past quarter. Property values here have risen 4.3% in the three months to June, compared to a quarterly increase of just 2.1% in Prime Central London. As a result, the price premium you can expect to pay for a property in Prime Central London has now fallen to a record low of 41%, down from 47% in Q2 2012.

Clapham, Brook Green and Balham top the charts with an annual house price growth of over 20%. In Brook Green, house prices have increased 8% in the last three months alone while properties in Holland Park and Chelsea have only risen by the same percentage over the course of a whole year.

In particular, due to a huge uplift in demand among first-time buyers, one-bedroom properties in Outer Prime London have risen in value at twice the speed of one-bedroom homes in Prime Central areas of the capital. The average value of a one-bedroom home in Outer Prime London has increased by 6% in the past three months to 530,264, compared to an average of 646,833 in Prime Central areas of the capital following only 3% quarterly price growth.

As a result, one-bedroom properties in Outer Prime London have now seen the fastest annual growth of any property type across the city, up 28% in the past year equivalent to 116,622, or 320 a day.

Peter Rollings continued: "For the majority of us, owning a slice of the real-life Monopoly board will continue to be an aspiration. But there is a property market outside of the world-famous postcodes of Prime Central London and its starting to steal the limelight. As prices in the capital have steadily risen, areas further afield have enjoyed a huge renaissance in popularity. Offering a more affordable range of house prices and a village vibe, Outer Prime London has extended a crucial olive branch for growing families and young professionals taking their first step onto the property ladder. The average price of a family home with two or more bedrooms here is less than half that in more central areas, but also offers some of the best capital gains in the long term as high demand fuels some of the most significant house price rises witnessed in London."

Typical one-bedroom properties in Prime London

CSV101393

One-bedroom flat in Clapham, 650,000 One-bedroom flat in Chelsea, 545,000

Rise of UK investors

With the considerable capital gains on offer, there has been a huge surge in the number of investors buying Prime London property in the last quarter, and they now account for the biggest proportion of purchases (31%). This has increased from 26% in the previous quarter, to the highest level recorded.

But the number of overseas and foreign nationality buyers is in long-term decline, dropping to just a fifth (21%) in the three months to June 2014. This represents the lowest level since our records began, and a significant fall from the same three month period last year when overseas and foreign nationality buyers accounted a third (33%) of all Prime London purchases.

Peter Rollings concludes:"London house price inflation made headlines all across the world at the start of the year, and this hasnt escaped the attention of canny investors looking for a safe harbour for their capital. But the demographic of investors is changing and contrary to popular belief, the Prime London property market isnt being propped up by overseas money. Were seeing a new wave of UK pension investors looking for steady rental yields and guaranteed long-term capital growth as a nest egg for retirement. Prime London property isnt just bricks and mortar for many its like a global reserve currency or long-term financial safety net. With demand picking up in the lettings market, it is increasingly tempting for people trading up or moving further out of the city to keep hold of existing properties as a buy-to-let investment."

For further, detailed analysis of Londons Prime property market, please see Marsh & Parsons' accompanying London Property Monitor.

-- ENDS--

Methodology:

The Prime Market Monitor uses a repeat valuation methodology that tracks values in a robust and representative mix-adjusted basket of properties across Prime London in the main areas in which Marsh & Parsons operates. Prime Central London comprises representative baskets of properties covering Chelsea, Kensington, Notting Hill, Holland Park and Pimlico. Outer Prime London comprises areas such as Clapham, Balham, Battersea, Barnes, Little Venice, Fulham and Brook Green. Prime London describes all these areas combined including Prime Central London and Outer Prime London.

Supply and demand statistics are based on an audit of Marsh & Parsons registrations and instructions during the quarter. Buyer profile information is taken from Marsh & Parsons quarterly MI data.


For further information please contact:The Wriglesworth Consultancy, Zo Holder / Neil Mackwood, 0207 427 1441 / 0207 427 1400

Marsh & Parsons, a multi-award winning estate agent, has been part of the London property scene since 1856. With 20 offices situated in prime positions across central, west and south west London, they have an intimate and extensive knowledge of the area. Marsh & Parsons services include residential sales and lettings, property management, new homes, developments & investments, professional surveying and corporate & relocation services.

Marsh & Parsons was acquired by LSL Property Services plc in November 2011, but continues to operate as a separate business, retaining its current management team.

A business that is built on energy, agility, professionalism and knowledge, Marsh & Parsons business aim is to be the agent who not only understands the local area around their offices better than any other agent, but is also at the heart of the community. They believe that Local know-how will achieve better results and make the difference for their clients.

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