London Residential Property Prices Grow by 13.6%

Prime residential property in central London has shown strong price growth over the past year of 13.6% but the rate of growth slowed to just 1.1% in the third quarter, a new report shows.

The analysis from Savills also shows that prices rose by an average of just 1.1% over the three months to the end of September compared to 6.4% from January to June.

There is continuing demand from overseas buyers looking for a global safe haven investment and some 58% of buyers were foreign nationals, with over one in five buying for investment. Less than half of buyers were acquiring property for use as their main residence and British buyers accounted for less than half of all purchases.

Those prime markets dominated by domestic demand have generally shown lower levels of price growth. But all prime London remains relatively buoyant compared to the mainstream UK market.

Within prime South West London, values rose by 1.3% in the quarter, taking annual price growth to 7.1%. This continued price growth has been underpinned by low levels of available stock. Those households selling prime family homes in the area are tending to recycle their housing wealth locally rather than make a move into the commuter belt.

The relative strength of the sub-markets is also seen in the sale price asking price ratio. In both central London and the prime markets of North London, including Hampstead and Islington, sale prices averaged 1% to 2% above asking price in the three months to the end of September.

By contrast, in South West London and the prime East of City markets they were 5% and 6% below asking price respectively.

The prime markets of Wapping and Canary Wharf have generally seen the least strong recovery since the downturn, although prices are 1.7% above their 2007 peak, with year to date growth of 4%. These areas have seen reduced levels of owner occupier demand from those employed in the financial and business services sector, but this has presented investment opportunities which have attracted overseas interest.