Prime Central London’s residential values have risen 4.3 per cent over the past 12 months and now average £2.3m per property according to Cluttons - but price growth is forecast to slow slightly next year.
By the end of 2015 PCL values will have risen 6.0 per cent says the agency, with the largest gains so far seen in Rotherhithe/Surrey Quays, Mayfair and Kensington.
Cluttons says it is still a vendor’s market with offers made within two per cent of asking prices or better, with properties in some areas - particularly Islington and Clapham - achieving sales in excess of the asking prices.
“Capital value growth is still strong within PCL but has continuously slowed since the height of Q1 2014, which saw a 17 per cent year-on-year growth. We anticipate values to grow more steadily thanks to a number of legislative changes such as the Bank of England’s strict lending criteria, stamp duty changes, additional tax on second homes and new taxes for international investors who were previously exempt from capital gains tax” says James Hyman, Cluttons head of residential agency.
“There is still strong interest in PCL but buyers are taking longer to decide on a purchase, especially for homes worth in excess of £3m. Buyers will now only commit to purchasing if they are 100 per cent certain the property meets all their requirements, mainly due to the significant jump in transaction costs.”
Cluttons defines PCL as properties priced £500,000 to £5m in South Kensington, Chelsea, Belgravia, Knightsbridge, Pimlico, Westminster, Hyde Park, Notting Hill Gate, Marylebone, Bayswater, Kensington, Mayfair Holland Park, St John’s Wood, Regent’s Park, Hampstead, Primrose Hill, Belsize Park, Maida Vale, Highbury & Islington, Shad Thames, Borough, South Bank, Surrey Quays, Wapping, Limehouse and the Isle of Dogs.
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"Prime Central London’s residential values have risen 4.3 per cent over the past 12 months and now average £2.3m per property according to Cluttons - but price growth is forecast to slow slightly next year."
Still looks pretty healthy to me. We keep hearing of the PCL market slowing down because of Osborne's measures, but I'm still not seeing much evidence of that. An average price of £2.3m per property? Alright for some, I suppose.
I agree that it's pretty depressing reading, but PCL operates on a whole other level to almost anywhere else in the world. This market has grown considerably over the last few years and now encapsulates many more areas. It used to be quite niche, including only the really affluent areas like Chelsea, Knightsbridge, Mayfair and Notting Hill, but its reach seems to get bigger every year, which is a worrying trend.
The PCL might be slowing slightly, but its average price is still very high and will remain that way until London is no longer attractive to super-rich overseas investors. There are pros and cons to luring these super-rich people. Supporters of it will say it brings in much-needed investment and helps to support the economy, critics will say it leaves homes empty, pushes up prices across the capital, makes property more unaffordable for the many and is actually bad for London's economy because these foreign investors don't actually spend time in the city where they've brought property - they just see it as a nice investment, a little nest egg to sit on as it goes up and up in value. If these investors aren't living in the city, they're not contributing to the local economy. They're not visiting local restaurants or shopping in local shops, or using public transport, or going to the theatre or museums, etc, etc. I have to say I'm sympathetic to this second point of view.
While there might be an initial period of readjustment in the short-term, in the long-term not turning London into a haven for the super-rich can only be a good thing. London is not Monaco or Luxembourg or Jersey or the Cayman Islands. It's one of the biggest, richest, most-visited and most diverse cities in the world. People from all walks of life should be allowed to live there. At the moment, the very poorest are being driven out. London without people living there will soon grind to a halt. So we need to be very wary of pricing too many out.
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