It was a tough year for prime London property in 2017, but there are signs the slump is easing.
Sales in the capital’s three most expensive boroughs – the City of Westminster, Camden and Kensington and Chelsea – jumped by more than 20% in the third quarter, according to a report from LSL Acadata.
The surge indicates that momentum is returning to prime central London after a year of falling property prices.
It was recently revealed that London house prices had fallen at their fastest pace since the aftermath of the financial crisis. Data showed home values in London declined 2.7% in September from a year earlier, the most since 2009.
Meanwhile, a 0.7% fall in August marked the first negative reading since 2011 as sellers in some of the city’s most expensive boroughs, including Westminster, Wandsworth and Hammersmith, were forced to cut prices.
But Acadata’s Peter Williams and John Tindale said movement at the top end of the market is helping to increase activity all the way down the housing chain.
The report also presents an optimistic picture for the rest of the country. Although November’s 0.9% annual gain in prices was the slowest since April 2012, and down from 6.3% a year ago, they increased from the previous month for the first time since March.
The signs of improvement buck a trend of pessimistic reports on housing, particularly regarding London, Bloomberg reported.
A recent survey of members of the Royal Institution of Chartered Surveyors (RICS) suggested house price growth would grind to a halt in 2018 because of Brexit uncertainty, a lack of available homes, November’s interest rate increase and stretched household budgets.
The RICS research found London would see a continuing trend of decline, spreading to the South East. However, this would be balanced with growth in most other parts of the UK such as Northern Ireland, Scotland, Wales and northwest England – areas where prices have yet to recover to pre-financial crisis levels.
RICS economist Tarrant Parsons said: “Following a pretty lacklustre finish to 2017, the indications are that momentum across the housing market will be lacking as 2018 gets under way.”
Similarly, Rightmove said last month that home values in London are likely to fall by 2% in 2018 after a 1.8% decline in 2017. House price growth nationally will cool further to 1% the weakest since 2011, Rightmove said.
Even Acadata’s report doesn’t paint an entirely rosy picture. Prices in the Greater London area were down 3% from a year ago in October, with the City of Westminster leading losses with an 18.2% drop. London’s market also remains a drag on the UK.
The annual change in prices reported this month would have been 3.3% without the capital and the South East.
DealMakerz reckons political and economic uncertainty in the UK could continue to weigh on the market in 2018, but we don’t think it will be long until London recovers from its slump.
Indeed, KPMG recently said the market will bounce back in 2021, when the capital will return to being the fastest growing part of the UK.
Foreign investors, in particular, still view London as an attractive option, given its status as a safe haven and its ongoing investment in infrastructure.