The pace of house price growth in the most expensive parts of the capital is climbing at its fastest rate for nearly seven years as the luxury property market shows signs of recovery.
House prices in the exclusive inner boroughs (known as Prime Central London, or PCL) rose 1.9 per cent in the year to February, the strongest rate of growth since July 2015 – 11 months before the EU referendum.
Knight Frank has reported 10 months of consecutive annual house price growth as offices reopen in full, both cultural and corporate events are back on and overseas students return.
Tom Bill, head of residential research for Knight Frank, describes this momentum as the “overdue recovery”.
“Prices are recovering after a seven-year period of tax changes and political uncertainty, a process which was then slowed down by the pandemic,” he says.
“We are now seeing prices rising in prime central London helped by the tentative return of overseas buyers,” Bill adds. However, he warns that international buyers are not yet the force they were before the pandemic.”
House price rises in luxury and leafy outer London villages
The recovery of luxury property market is not restricted to the core of the capital, in fact annual house price growth in the most desirable parts of outer London is rising at an even faster rate.
Average prices rose four per cent in the 12 months to February which was the highest figure since May 2015. It was the 11th consecutive month of annual growth and reflects “the continued appetite for space and greenery,” says Tom Bill, head of research for Knight Frank.
The best performing luxury pockets are spread across the capital, with high demand continuing for the leafy peripheral London villages, along with a desire to return to the most desirable inner enclaves. The clear mid-pandemic pattern of buyers moving further out for more space is splintering with many prioritising location once again.
The strongest performing areas by annual price growth were Wandsworth (nine per cent), Wimbledon (8.6 per cent), Richmond (8.3 per cent), Dulwich (6.4 per cent), Islington (5.8 per cent) and Bayswater (5.2 per cent), according to the Knight Frank research.
Demand continues to outstrip supply
There are early signs that supply is starting to pick up. Prospective vendors have held back, either cautious of letting strangers traipse around their homes in the midst of a pandemic, or because of the looming uncertainty caused by interest rate rises, inflationary pressures and escalating fuel costs.
“Some sellers are not putting their homes on the market because they haven’t found what they are looking for yet – which is creating a vicious cycle and a lack of stock,” says Lewin Craig-Corbett, sales manager of Clapham South and Balham for Marsh & Parsons.
Any slight increase in supply is being swallowed up by rampant demand. The number of sales instructions was 1.1 per cent below the five year average in February whereas the number of prospective new buyers registering in January in the London was the highest figure for 20 years. While the figure dipped slightly in February, it was still 68 per cent above the five-year average.
