Prime London residential

S A V I L L S R E S E A R C H

M A R K E T I N M I N U T E S | J U L Y 2 0 1 8

Central LondonHouse prices in the highest-value central London locations fell by an average of 0.9% in the second quarter of 2018, leaving them 17.6% down on their 2014 peak. Year-on-year price falls now stand at 3.8%, a marginal improvement on the annual 4.2% falls recorded at the end of the fi rst quarter.

Variation in performanceHowever, the average conceals huge variation in performance at an individual property level. For the top-performing 10% of prime central London properties by price growth, prices have held their own in the past year (+0.2%) and, at just 1.5% down, are all but back to peak 2014 values (see chart below).

By contrast, the weakest 10% of prime homes have lost almost one-third (-32%) of their value in the same period after falling 7.7% in the past 12 months.

It is hard to generalise about the factors behind this range. Some of it is down to the size of the property, someis down to condition and some is simply down to what is currently fashionable.

Location appears very much to be a secondary indicator of performance. The exception is Marylebone, which stands out as the most robust local market by a wide margin. However, while average values in this prime central London village have fallen by a net fi gure of just 6.6% since peak, they have fallen 2.6% in the past year – in what is still a price-sensitive market.

Pricing strategiesThe uneven impact of the main market drivers – namely taxation, and political and economic uncertainty – means that pricing individual properties in order to encourage competitive bidding has become increasingly diffi cult. That requires sellers to have a fl exible pricing strategy.

However, there is little to suggest that this situation is going to change over the next 12 months, even though there seems to be a more widely held view among potential buyers that pricing is at, or approaching, the bottom of the market.

Source Savills Research

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-35%1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile

Best performing

Top performers Average prime London house prices registered a further small fall in Q2 of 2018, but there is now a signifi cant di� erence between best and worst performing properties

Prime central London Prime outer London

Worst performing

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S A V I L L S R E S E A R C H J U L Y 2 0 1 8

Savills team

Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 o� ces and associates throughout the Americas, UK, 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 DirectorResidential Research020 7016 3836kbennison@savills.com

Katy WarrickHead of LondonResidential Research020 7016 3884kwarrick@savills.com

Lucian CookHead of UKResidential Research020 7016 3837lcook@savills.com

Please contact us for further information

Across outer prime London, values have tracked prime central London over the recent past, falling 0.9% in the last quarter and 4.1% during the past year. But as prices generally stood up better than in more central locations in the immediate wake of the stamp duty changes of 2014, they are only 7.3% below their peak.

However, the extremes are also marked in these outer London markets (see top performers chart). Top-performing properties have had price growth of 9.9% since 2014, despite falls of 8.9% in the past two years. However, the weakest slice of

this market is down 23.7%, a 33.6 percentage point gap between the top and bottom of the market.

Smaller properties prove more robust In areas such as Fulham, Clapham, Chiswick and Islington, smaller, less expensive prime properties have more consistently performed better than the largest, most expensive homes. These markets are traditionally needs-based, with buying power dependent on wealth generation from high-value sectors of the London economy. Many buyers will also require borrowing, and therefore have an eye

on interest-rate indicators, with modest rate rises still being penciled in for the second half of 2018.

The need to demonstrate good valueThis combination of factors means they will only commit when they believe they are getting value, especially given the weakness in the wider London mainstream market. Where this is the case, sales are being agreed. We expect a continuation of these market conditions until there is more political and economic certainty. By contrast, stamp duty seems to have been more widely factored into pricing.

Outer prime London

Size in sq ft 0-999 1,000-1,999 2,000-2,999 3,000-3,999 4,000-4,999 5,000-6,000 >6,000

Average value £640,000 £1,240,000 £2,291,000 £3,200,000 £4,429,000 £5,636,000 £8,370,000

Price movement since June 2014 -3.0% -7.5% -10.3% -11.7% -13.8% -14.5% -18.2%

ISLINGTON

SHOREDITCH

WAPPING

CANARY WHARF

PIMLICO

WESTMINSTER

KNIGHTSBRIDGE

MARYLEBONE

NOTTING HILL

KENSINGTON

MAYFAIR

CHELSEA

HAMMERSMITH

EALING

CHISWICK

EAST SHEEN

HAM

PUTNEY

FULHAM

BARNES

WANDSWORTH

CLAPHAM

BATTERSEA

ST JOHN’S WOOD

HAMPSTEAD

PRIMROSE HILL

RICHMOND

WIMBLEDON

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2 PRIME NORTH WEST LONDONQuarterly growth -1.8%Annual growth -3.7%Growth since 2014 peak -7.6%

1 PRIME CENTRAL LONDONQuarterly growth -0.9%Annual growth -3.8%Growth since 2014 peak -17.6%

3 PRIME SOUTH WEST LONDONQuarterly growth -0.6%Annual growth -4.6%Growth since 2014 peak -8.5%

5 PRIME NORTH & EAST LONDONQuarterly growth -1.1%Annual growth -2.8%Growth since 2014 peak -6.6%

ALL PRIME LONDONQuarterly growth -0.9%Annual growth -4.0%Growth since 2014 peak -10.6%

4 PRIME WEST LONDONQuarterly growth -0.5%Annual growth -4.1%Growth since 2014 peak -8.6%

Outer London price movement since June 2014 by size of dwelling (to June 2018)

Prime London price movements to Q2 2018

Source Savills Research

Source Savills Research

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