prime london residential markets - savills · across the more domestic prime south west london,...
TRANSCRIPT
House prices across prime London continued to soften over the last quarter of 2017, leaving values 3.5% below where they were a year ago.
In the central markets, there are signs that values may be bottoming out, following three years of price falls. However, the other more domestic parts of the prime London market are under pressure from fragile buyer sentiment.
Outside of prime central London, where the average value is just below £2 million, prices fell 1.2% over the fourth
quarter of 2017 and are now 5.8% down from their peak in September 2014. However, price falls at the top end of the market are more in line with central London, with properties over £2 million now 10.2% below their 2014 level.
Buyers in these more domestic markets are now feeling the constraints of the mortgage market review, as well as uncertainty around the Brexit process and its potential impact on employment, particularly in the financial and business services sector.
Signs of stability in prime central London
Prime London Prices continue to soften, but there are signs that central London values are bottoming out
-3.5% Price falls across
prime London during 2017
Source Savills Research
For the first time since June 2012, annual price falls in prime South West London have exceeded those in prime central London. Values in central London slipped by a marginal 0.9% in the final quarter of 2017, with annual price falls of 4%.
Across the more domestic prime South West London, values fell by an average of 1.6% in the last three months of 2017 and 4.2% over the year, making it the capital’s weakest prime market segment.
The prime central London housing market appears to be ahead of the curve in adjusting to current market conditions. Values are, on average, 15.9% below their 2014 peak, ahead of the first significant stamp duty increase. However, the rate of price falls has slowed and values are now finding a level.
In prime South West London, the falls have been less than half those seen in prime central London.
Fulham, the market that traditionally behaves more in line with central London than the rest of South West London, has recorded the steepest falls in this submarket. Prices fell by 4.6% in 2017 and are down 14.4% on the 2014 peak, in line with locations such as Knightsbridge and Holland Park.
This means average values in Fulham, which passed the £1,000 psf mark in 2013, have now fallen back to £890. This is just below the £910 prime Battersea average and well below Chelsea’s £1,600. This repositions Fulham as a value location for those looking to make their equity stretch further than in prime central London.
South West London under pressure
Prime London residential markets
S A V I L L S W O R L D R E S E A R C H
M A R K E T I N M I N U T E S | J A N U A R Y 2 0 1 8
Prime WestLondon
North & EastLondon
CentralLondon
North WestLondon
Prime SouthWest London
All PrimeLondon
-1.1% quarterly
-2.7% annual
-7.4% since 2014 peak
-0.3% quarterly
-3.3% annual
-4.7% since 2014 peak
-0.9% quarterly
-4.0% annual
-15.9% since 2014 peak
-0.9% quarterly
-0.7% annual
-5.3% since 2014 peak
-1.6% quarterly
-4.2% annual
-7.3% since 2014 peak
-1.1% quarterly
-3.5% annual
-9.1% since 2014 peak
Savills_MiM_London Resi v2.2.indd 1 16/01/2018 14:43
OutlookThe prime central London market may be bottoming out, but we don’t expect a return to growth until there’s greater clarity on the Brexit process. Economic uncertainty means the market will remain discretionary, while international buyers will be reluctant to take advantage of the currency play given the high tax environment. Our forecasts anticipate it will be two years before we see a bounce in values. With continued weakness in other prime London markets, we forecast small falls in 2018. These markets are more dependent on domestic wealth generation and access to borrowing than prime central London. As such, our forecasts are for modest house price growth over the next fi ve years.
Prime prospects We forecast a bounce in values in central London by 2020
Prime central London
Other prime London
0.0% 2.0% 8.0% 5.5% 3.5%
2018 2019 2020 2021 20225-year compound growth
-2.0% 0.0% 5.0% 4.5% 2.5%
20.3%
10.2%
South West slide Annual price falls in prime South West London exceeded prime central London in 2017
An
nu
al g
row
th
S A V I L L S W O R L D R E S E A R C H J A N U A R Y 2 0 1 8
15%
10%
5%
0%
-5%
-10% 2013 2014 2015 2016 2017
8.3%
14.0%
-0.4%
-3.3%
-6.8%
-4.3% -4.0% -4.2%
3.1%
1.9%
Source Savills Research
Savills team
Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 700 o� ces and associates throughout the Americas, the UK, continental Europe, Asia Pacifi c, Africa and the Middle East, o� ering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every e� ort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
Kirsty BennisonAssociate, UK Residential Research020 7016 [email protected]
Katy WarrickHead of London Residential Research020 7016 [email protected]
Lucian CookHead of UK Residential Research020 7016 [email protected]
Please contact us for further information
Prime South West London
+9.9%Total 5-year price
change to end 2017
Prime central London
-6.7%Total 5-year price
change to end 2017
Year
Source Savills Research Note These forecasts apply to average prices in the secondhand market. New build values may not move at the same rate
Prime central London Prime South West London
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