House prices in the prime central London market have risen slightly, by 0.8% in the second quarter (Q2) of 2015. This is the first increase since September 2014, according to the latest index.
The highest growth in the past year was experienced in Pimlico, where values rose by 5%, or £66,000, revealed the data from Marsh & Parsons estate agent.
There was also a 17% increase in demand for prime property in Q2, but supply rose by just 10%. Overall, investors made 42% of sales in this sector, an 8% annual rise.
Prime London House Prices Rise for First Time Since Sep 2014
In the same period, there was an increase in foreign buyers, which accounted for 34% of all sales, up from 30% in Q2 2014. The firm believes this is due to an influx of European buyers of all nationalities.
Prime London homes cost an average of 27% more per square foot than all London properties. The average price per square foot of property in central areas, such as Holland Park, Notting Hill or Kensington and Chelsea, is £1,516.
Contrastingly, the overall price of prime London property is £1,192 per square foot.
CEO of Marsh & Parsons, Peter Rollings, says: “The excellent capital appreciation and secure nature of property in prestigious central addresses of Kensington, Chelsea and Holland Park have long made them appealing, particularly to the investor, and it’s encouraging that we’ve seen such a rise recently.
“Investors are a good gauge of the overall health of the London market. If there was any cause for concern about the future property market, investors would be upping sticks and moving elsewhere.
“But the fact they are still putting down roots in the capital shows how fertile current conditions are. While there may not be much action to see at the moment, prices are still growing and the foundations for fruitful capital returns are strong.”
He also notes that price growth has reversed and started to improve again, with a 0.8% quarterly increase compared to a 0.6% decline in Q1 2015. Outer prime parts of London have witnessed the strongest recovery, with 1% growth.
However, house price growth in this sector is still much lower than last year. Annually, prices have dropped across the whole prime London market.
Rollings says that values should be considered over the longer term, stating that since June 2013, the price of the average prime London home has risen by 12.1%.
Regarding property type, family sized homes have experienced the greatest increase in price, with four-bedroom houses in prime London locations rising in price by 1.3% quarterly. Additionally, demand for these homes has grown, with the amount of registered buyers up 17%.
Rollings expects that London house prices will become steadier than prices in the rest of the country in the coming months, as Londoners face much higher Stamp Duty.
He adds: “There’s no denying that London has been struck by significant regulatory changes, and given it’s position at the frontline of the UK’s property market, is having to absorb the impact.”1