Kensington, London, one of the UK’s most expensive property markets Photo: Tracylee
UK buyers have accounted for 53 per cent of the capital’s prime residential market since the start of 2014, Knight Frank’s latest London report reveals, up from 36 per cent last year and 27 per cent in 2012.
At the same, Knight Frank’s figures show that annual average price growth slowed to 7.5 per cent, a slowdown that is more prevalent in the higher price brackets.
Annual growth for £10 million plus properties was 3.3 per cent, a moderation driven by buyers looking for value outside the traditional prime postcodes of Mayfair and Knightsbridge, where prices have risen quickly, ahead of the rest of the capital’s prime market.
In addition to the impact of recent Bank Holidays and bad weather, there is a “growing sense the market is pausing for breath”, says Knight Frank, which is broadly similar to the trend recorded int he mainstream market, with mortgage approvals falling in April for the third month in a row following prolonged price increases.
Richard Barber, partner at Prime Central London estate agency, W.A.Ellis, agrees that caution is now the name of the London game: “Although there has been much talk of a housing bubble, a more cautious story is emerging in London.
“It is the rate of transaction which is of most concern and a strong barometer of confidence within the upper end of the London market. In May 2013, 932 properties in total were sold throughout London (Lonres stats). However, this May, there have only been 774 sales – almost a 17 per cent reduction in transaction levels year on year. It is also interesting to note that 25 per cent of the house stock currently available on the market has been reduced in price, indicating an initial optimism now countered with a distinct sense of realism, as the window of opportunity within the Spring/Summer market begins to narrow.”
The average number of applicants registered in May was down one-third compared to May 2013, notes Knight Frank.
While there appears to be consensus on the moderation in the London prime market, though, Knight Frank’s findings that Britons are now back in the buying game is perhaps contested by claims from Chestertons, whose firm notes an ongoing appeal to foreign investors.
Chinese state-owned Greenland Group invested £1.2bn in two major developments, while the agency also speculates that there is a further £10 billion to be invested by Dutch institutional investors. Chestertons forecasts growth of 2 per cent in the capital, but Knight Frank is less upbeat.
“We are expecting price growth in prime central London to slow to zero in 2015,” the firm comments.