London's market stabilises as price growth slows - Marsh & Parsons
Thu 24 Jul 2014
Londons property market is returning to steadier, healthier place, says estate agency Marsh & Parsons, as price growth moderates, supply levels lift and the value gap between central and outer areas narrows. Q2 saw prices rise by 3.1%, down from +4.3% in Q1. That takes monthly growth to a more normal +0.4% in June, from a slightly hyper +1.8% in April. Prime Londons annual price increase now stands at +12.6%. The average price in prime London now stands at 1,589,720. 55% of prime London homes are now worth over 1m, following a 2% increase in Q2 and a 7% annual increase in the number of seven-figure properties. 77% of homes in PCL are worth over 1m. Normalisation is even more pronounced at the top of the market, where chunky SDLT burdens and that lingering fear of a mansion tax are moderating demand: there has only been 1% increase in the proportion of Prime London properties worth 3 million or more over the past year, reports M&P, while quarterly growth in prime central London has almost halved to 2.1% in the three months to June 2014, down from 4.0% in previous quarter. A major factor in this mellowing of price growth is a touch more balance in the supply/demand ratio: the number of buyers per property has dropped from 24 in January to 16 in June as the number of available properties jumped by 25.6% and demand has dipped by 2.4% since Q1. Compared to the same point last year, there has been a 5.6% increase in demand, and a 10.2% increase in the supply of properties. Property values in outer prime London are have risen 15.3% over the past year compared to 10.5% annual growth in Prime Central London. Marsh & Parsons highlights Clapham, Brook Green and Balham as the Outer Prime London hotspots, all delivering annual price growth of over 20%. PCL stalwarts Chelsea and Holland Park, by contrast, have seen prices rise by just 7-8% over the past twelve months (Brook Green house prices have increased by 7.9% in the three months to June alone.) All this means that the PCL premium compared to wider prime London prices has dropped to a new record low of 41%, from 44% in Q2 2013 and 47% in Q2 2012. Domestic UK-based investors accounted for the lions share 31% - the highest level on the agencys records) of all Prime London purchases made during Q2 2014, as overseas buyers fell away. Just 21% of all purchases throughout Q2 2014 were made by overseas or foreign nationality buyers, failing from 33% in Q2 2013 to the lowest recorded level. Peter Rollings, CEO of Marsh & Parsons: 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 views purchasing London Prime property as a less daunting process than has been the case previously.