RESIDENTIAL RESEARCH PRIME OUTER LONDON OUTER LONDON INDEX RECENT MARKET-LEADING RESEARCH PUBLICATIONS Knight Frank Research Reports are available at Prime Central London Sales Index April 2015

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  • Property prices in prime outer London increased by 0.3% in April, denoting muted growth ahead of the general election on 7 May.

    Annual growth has slowed to 4.5% from 12.1% in April last year as a prolonged period of political uncertainty mounts surrounding the outcome.

    The prospect of further property taxation has caused price growth in the 2 million-plus market to slow to a greater degree than in lower price brackets, as figure 1 shows.

    However, in recent weeks there has been a limited reversal of this trend in some areas.

    Many vendors of properties worth less than 2 million are hesitating before putting them on the market due to the election. The caution underlines how a wider sense of uncertainty about the election and its impact on house prices is altering the behaviour of a section of the market that would be unaffected by any proposed tax changes.

    Others are simply waiting for the election to finish before acting and there are a number of properties that will go on the market on Monday 11 May, irrespective of the outcome.

    Meanwhile, there has been a small pick-up in demand for properties worth more than 2 million since the start of the year, particularly in south-west London. One driver is the fact vendors have moderated asking prices against the background of political uncertainty.

    The lettings market continues to benefit from a transfer of demand from the sales market due to the election, as well as the underlying UK economic recovery and the fact companies are expanding in London.

    Demand remains strong and the number of tenancies agreed and commenced in the year to March 2015 rose by 34% and 42%, respectively. Meanwhile, the number of new prospective tenants and viewings rose 30% and 26%.

    Rental values grew by 0.4% in April, taking annual growth 1.75%, the highest rate in three years. Gross rental yields were largely unchanged at 3.49%, close to their 12-month average.

    April 2015Prices grew by 0.3% in prime outer London in April

    Annual growth slowed to 4.5% from 12.1% last April ahead of the general election

    Demand for higher-value properties edges higher as sellers adjust asking prices

    Annual rental value growth was 1.75%, the highest rate in three years

    Viewings rose 26% in year to April 2015 while tenancies commenced rose 42%

    TOM BILL Head of London Residential Research

    There has been a small pick-up in demand for properties worth more than 2 million since the start of the year Follow Tom at @TomBill_KF

    For the latest news, views and analysis on the world of prime property, visit Global Briefing or @kfglobalbrief

    DEMAND FOR HIGHER-VALUE PROPERTIES EDGES UP IN PRIME OUTER LONDONGeneral election uncertainty causes sellers to delay though demand has risen for 2 million-plus properties since the start of the year, says Tom Bill

    RESIDENTIAL RESEARCH

    PRIME OUTERLONDON INDEX

    FIGURE 1 Price growth by area and price band (rebased to 100)

    FIGURE 2 The lettings market surge continues (Year to March 2015 vs 2014)

    Source: Knight Frank Residential Research Source: Knight Frank Residential Research

    98

    100

    102

    104

    106

    108

    110

    Apr-1

    4

    May

    -14

    Jun-

    14

    Jul-1

    4

    Aug-

    14

    Sep-

    14

    Oct

    -14

    Nov

    -14

    Dec-

    14

    Jan-

    15

    Feb-

    15

    Mar

    -15

    Apr-1

    5

    East South-west

    1m-2m 2m-3m 3m-4m 4m-5m Over 5m

    +34%

    +26%

    Tenancies Agreed

    +30%

    Prospective Tenants

    +42%

    Tenancies Commenced

    Viewings

  • PRIME OUTER LONDON INDEX

    RECENT MARKET-LEADING RESEARCH PUBLICATIONS

    Knight Frank Research Reports are available at KnightFrank.com/Research

    Prime Central London Sales Index April 2015

    Prices in prime central London rose by 0.3% in April, as a mood of uncertainty continued ahead of the general election in May.

    Despite the modest increase, prices have been broadly flat in recent months and annual growth dipped to 2.8% in April. It is the lowest rate since November 2009, a period when the market had begun to rebound following the collapse of Lehman Brothers the previous year.

    After an exceptionally strong run of growth that saw prime central London property cement its global reputation as a safe investment, political uncertainty has now replaced economic uncertainty.

    During an election campaign where the opinion polls remain deadlocked and a clear-cut outcome is not immediately guaranteed, some sellers are waiting for more clarity before acting, which has led to to pent-up demand.

    Irrespective of the outcome, a growing number of vendors are lining up properties for sale once the election is over, which suggests there will be a bounce in transaction levels.

    Demand remains robust, primarily on the back of a strengthening UK economy but also from overseas buyers who view London as an attractive place to live given the shifting nature of geo-political uncertainty around the world.

    Less than a week from the general election, this tight supply and strong demand has in some instances led to a stand-off between buyers and sellers in the expectation that more stock will appear after the election. As a result, viewings were 14% lower in the year to March 2015 than the previous year.

    While there is less political uncertainty in lower price brackets and price growth broadly remains stronger below 2 million, there remains strong appetite for higher-value property. Some deals have been done as sellers have adjusted asking prices down to reflect the fact growth has cooled across the various price bands, as figure 2 shows.

    It is also worth noting that annual price growth in prime central London has been slowing for three years, which means that some degree of political uncertainty is already priced in.

    APRIL 2015Prices grew 0.3% in April as uncertainty surrounding the general election outcome continued

    Annual growth was 2.8%, the lowest rate in more than five years

    Vendors line up post-election sales irrespective of outcome

    Viewings fall 14% in the year to March 2015

    Annual growth has been slowing for three years, indicating some political risk is priced in

    TOM BILL Head of London Residential Research

    Irrespective of the outcome, a growing number of sellers are lining up properties for sale once the election is over Follow Tom at @TomBill_KF

    For the latest news, views and analysis on the world of prime property, visit Global Briefing or @kfglobalbrief

    PENT-UP DEMAND GROWS IN PRIME CENTRAL LONDON AS ELECTION COUNTDOWN BEGINSVendors are lining up post-election sales in the expectation that political uncertainty will ease, says Tom Bill

    RESIDENTIAL RESEARCH

    PRIME CENTRALLONDON SALES INDEX

    FIGURE 1 Price growth in April since the 2010 general election

    FIGURE 2 Growth by price band since the 2010 general election (rebased to 100)

    Source: Knight Frank Residential Research

    Apr-1

    0

    Apr-1

    1

    Apr-1

    2

    Apr-1

    3

    Apr-1

    4

    Apr-1

    5

    0%

    2%

    4%

    6%

    8%

    10%

    12%

    14%

    16%

    18%

    20%

    22%

    0%

    2%

    4%

    6%

    8%

    10%

    80

    90

    100

    110

    120

    130

    140

    150

    160

    Apr-1

    0

    Apr-1

    1

    Apr-1

    2

    Apr-1

    3

    Apr-1

    4

    Apr-1

    5

    Source: Knight Frank Residential Research

    Annual growth 6-month growth

    1m to 2m 2m to 5m 5m to 10m over 10m

    FIGURE 3 Price growth in prime outer London by area in the year to April 2015

    DATA DIGESTThe Knight Frank Prime Outer London Index, established in 1997, is the longest running and most comprehensive index covering the prime outer London residential marketplace. The index is based on a repeat valuation methodology that tracks capital values of prime outer London residential property. Prime outer London is defined in the index as covering: Barnes, Battersea, Canary Wharf, Chiswick, Clapham, Fulham, Hampstead, Richmond, Riverside*, Wandsworth & Clapham, Wapping and Wimbledon.

    Prime London comprises all areas in prime outer London, as well as Belgravia, Chelsea, City & Fringe, Hyde Park, Islington, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, South Bank, South Kensington and St Johns Wood.*Riverside in prime outer London covers the Thames riverfront from Battersea Bridge in the east running west to Kew Bridge. In prime central London, it covers the Thames riverfront from Battersea Bridge in the west running east to Tower Bridge and includes South Bank.

    KF Prime Outer London Index

    12-month % change

    6-month % change

    3-month % change

    Monthly % change

    Nov-14 286.1 9.0% 2.9% 0.6% 0.0%Dec-14 285.7 8.0% 1.8% -0.3% -0.1%Jan-15 285.5 7.0% 0.9% -0.2% -0.1%Feb-15 286.0 5.9% 0.6% 0.0% 0.2%Mar-15 286.8 5.1% 0.0% 0.4% 0.3%Apr-15 287.4 4.3% 0.5% 0.7% 0.2%

    Nov-14 186.2 -0.31% 1.04% 0.06% 0.02%Dec-14 186.2 -0.20% 0.38% 0.01% 0.00%Jan-15 186.4 0.07% 0.86% 0.14% 0.12%Feb-15 186.7 0.33% 0.29% 0.23% 0.11%Mar-15 187.3 0.51% 0.57% 0.56% 0.33%Apr-15 188.1 1.75% 1.02% 0.88% 0.44%

    Source: Knight Frank Residential Research

    Prime Outer London Sales Index

    Prime Outer London Rentals Index

    South-west London 2015

    MIGRATION OF BUYERS FROM CENTRAL LONDON

    HOUSEHOLD INCOME MAP OF LONDON

    PRICE PERFORMANCE AND VALUES PER SQUARE FOOT

    SOUTH-WEST LONDON 2015LONDON MARKET FOCUS

    RESIDENTIAL RESEARCH

    SW LONDON FINAL.indd 1 27/01/2015 12:31London Review Winter 2015

    RESIDENTIAL RESEARCH

    IMPACT OF TAX CHANGES MANSION TAX AND THE LETTINGS MARKET

    AREAS OF OUTPERFORMANCE

    LONDON RESIDENTIAL REVIEWLONG-TERM REWARDS, SHORT-TERM UNCERTAINTY WINTER 2015

    The Wealth Report 2015

    2015

    The WealTh RepoRT

    The global perspective on prime property and wealth

    The W

    ealTh

    Repo

    RT

    2015

    www.knightfrank.com/wealthreport

    RESIDENTIAL RESEARCHTom Bill Head of London Residential Research +44 20 7861 1492 tom.bill@knightfrank.com

    PRESS OFFICE Daisy Ziegler +44 20 7861 1031 daisy.ziegler@knightfrank.com

    Jamie Obertelli+44 20 7861 1104jamie.obertelli@knightfrank.com

    Knight Frank LLP 2015 - This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members names.

    http://my.knightfrank.com/research-reports/prime-central-london-rental-index-2316.aspxhttp://my.knightfrank.com/research-reports/prime-central-london-sales-index.aspxhttp://my.knightfrank.com/research-reports/prime-central-london-sales-index.aspxhttp://www.knightfrank.com/research/south-west-london-2015-2650.aspxhttp://www.knightfrank.com/research/south-west-london-2015-2650.aspxhttp://www.knightfrank.com/research/south-west-london-2015-2650.aspxhttp://www.knightfrank.com/research/south-west-london-2015-2650.aspxhttp://content.knightfrank.com/research/78/documents/en/winter-2015-2547.pdfhttp://content.knightfrank.com/research/78/documents/en/winter-2015-2547.pdfhttp://content.knightfrank.com/research/78/documents/en/winter-2015-2547.pdfhttp://content.knightfrank.com/research/78/documents/en/winter-2015-2547.pdfhttp://my.knightfrank.com/research-reports/the-wealth-report-2227.aspxhttp://my.knightfrank.com/research-reports/the-wealth-report.aspxhttp://my.knightfrank.com/research-reports/the-wealth-report.aspxhttp://www.knightfrankblog.com/global-briefing/

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