House prices have slipped again in London’s prime market, but are being tipped to recover in the next few years by two new reports.
Figures released by Savills and JLL shows that in in the third quarter of 2018 the capital’s prime property values fell by 0.6% and 0.5% respectively. But JLL also show that rents in the prime central London market, driven by wealthy students from overseas, have gone up by 0.4% – the highest quarterly rise since Q2 in 2014.
Good value deals improve the picture
Despite the fall in London’s prime prices in Q3, Savills feel that there are good signs in the market because, “…property is beginning to look relatively good value, and well-appointed property that is appropriately priced continues to sell.”
Stamp duty on properties worth over £1million pulled in £2.9billion in 2017/18, with receipts for the boroughs of Kensington & Chelsea and the City of Westminster of just over £1billion totalling more than all of Wales, the north-west and north-east of England and the Yorkshire/Humber region put together.
Overseas investor stamp duty queries remain
Plans to introduce stamp duty for foreign investors – announced in September and to be ratified in the new year – are referenced in both reports. Savills predict the move will quieten the market, but they “don’t rule out” a spike in activity just before the surcharge is finally brought in.
In the rental market, a 48% leap in transactions from Q2 to Q3 noted by JLL was fuelled by increased demand from students ahead of the start of the academic year. But in the year to Q3, transactions were 11% lower than in the same period in the year before to continue a downward trend since late in 2017.
Brexit and further political upheaval are mentioned in both reports. But Savills foresee “…a return to price growth from 2021….underpinned by London’s continued appeal to both commerce and global wealth.”
JLL are broadly in line, predicting a “marginal” growth in 2019 that will develop into 4%pa by 2021.