Buyer momentum continued to build and property prices grew modestly in July in London’s prime property sector, according to new data by London Central Portfolio (LCP). The average prime London home was worth 1.5 per cent more than the same period in 2018, with an average value of £1,909,015.
Prime properties in Central London have more than doubled in value since the financial crash in 2008, when they were worth an average price of £882,857, LCP estimated. Despite this, sales volume remained weak in July 2019, at 3,242 sales in the last year. This figure is almost half the volume seen when activity peaked in 2010, at a high of 6,062 sales.
Transactions showed growth on a quarterly basis, of 26.7 per cent, indicating increasing demand in the sector in recent months, likely due to a rush of activity following the UK’s original EU departure date back in late March.
Demand recovers in prime property
The quarterly growth in prime property transactions comes, despite an annual fall of 5 per cent, which indicates that demand has started to move in a positive direction. An increase in transactions boosts the possibility that prices may begin to rise at a faster rate, but investors are expected to hold back in the event of sterling weakness, according to LCP.
New builds were reported to have a significant premium over pre-existing prime London stock, of 50.8 per cent, meaning new builds were estimated to be worth an average of £3,425,886. LCP did note, however, that this premium used to be 70 per cent, as recently as six months ago.
Price growth among new builds recorded a decline of 9.3 per cent, as a number of high-value developments were completed, with no equivalent transactions coming through, to absorb the increasing supply. As a result, new build sales fell 38.9 per cent in the past year to 417 in the last 12 months, averaging about eight sales per week.
Greater London shows recovery
The Greater London market as a whole showed signs of recovery, LCP recorded. A Greater London home was worth an average price of £644,746 in July, according to the new data, which was a monthly rise of 3.1 per cent in July alone. Over the past year, prices grew by 1.8 per cent, meaning the market was seeing stronger growth than it did in 2018.
Transactions fell in Greater London on an annual basis, with the total annual volume declining by 1.7 per cent, with 85,701 sales up to July 2019. Despite this, on a quarterly basis, transactions surged by 33.4 per cent, indicating a more recent bottoming out in the market.
Naomi Heaton, CEO of LCP, commented: “Whilst these signs of recovery are good news for a market which has been languishing, greater political and economic certainty will, without a doubt, reinforce this. At the moment, this appears to be a balance. Developers will certainly be watching carefully, having faced a difficult year, with annual sales down over 20 per cent.”