Prices for homes outside the centre of the Capital are rising at a record pace. – telegraph.Co.Uk
Prime property prices in London’s suburbs have shot up at their fastest rate in four years, continuing to outpace value growth in Central London, and driven by the domestic buyer.
According to real estate advisers, Savills, prices across all of “prime” Greater London (the top five to 10pc of the housing market by price) rose by an average of 13.1pc year on year.
By contrast prime central London has slowed by a quarterly rate of 2pc over the 12 months to the end of March, with prices rising 8.9pc year on year and the average price for a home at £4.2m.
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Long perceived as the playground of affluent overseas investors, the exclusive areas of Kensington, Belgravia, Knightsbridge, Chelsea and Mayfair have felt a thinning of demand for mansions and superflats as wealthy London families, reluctant to sell during the downturn are now realising their centrally located homes and relocating just a few miles down the road to surrounding areas such as Fulham or Hammersmith.
In turn, Savills said this is driving a flow of domestic capital from the “London villages” in zone two, out to the peripheral boroughs of Richmond or Chiswick, as families uproot to larger plots.
“Over the past year, almost two-thirds of prime London sales have been to UK buyers,” said Lucian Cook, head of residential research at Savills. “As a result, the strongest price growth is being seen in the less centrally located areas favoured by domestic family buyers, notably prime southwest London – a band that runs from Battersea to Wandsworth and west to Wimbledon, Richmond and Chiswick which is up 14.7pc year on year – and prime north London, centred on Islington, up 15.8pc year on year.”
Positive sentiment in these domestic wealth corridors is now feeding into the Wapping and Canary Wharf markets, which have lagged to date but are now having a real resurgence, as sentiment amongst young City-based home buyers and investors continues to improve.
Values have risen by 4.4pc in the quarter and by 17.2pc year on year, with Wapping shooting up 21pc in the past year, putting it ahead of any other prime location.
Prime central London growth is now slowing, as expected, with values up just 2pc in the past three months, although this is not yet reflected in annual growth figures which stand at 8.9pc.
“This market is just beginning to appear more price sensitive, particularly at the very top end, where buyers are more discretionary and perhaps more fully invested,” said Mr Cook.
The core prime central London are now beginning to plateau, having led the recovery. By contrast, the relative newcomer, Marylebone, is still showing strong growth because it continues to offer value in the context of central London.
Values in Marylebone rose by 4.2pc in the quarter to leave them 19.3pc ahead year on year. This compares to marginal growth of 0.6pc in higher value Chelsea, Knightsbridge and Belgravia, and just 5.0pc year on year.
At the very top end of the market, properties worth over £10 million are now plateauing, having risen by just 1.9pc year on year. “At some 50pc above their pre crunch levels, these properties are now looking relatively fully valued and a period of consolidation is required,” Mr Cook said.
This displacement of domestic wealth into the outer “villages” is fuelling fears of a “Lights out London”, as foreign investors buy up Central London property to house their children as students only part of the year, or use as a holiday home, when doing business or shopping. A concern the Government is seeking to address through punitive tax on property bought through corporate holdings.
The average cost of a home in prime north west London is £3.1m, followed by £1.9m in the south west, £1.5m in the northern “villages” and £785,000 in the prime east of the City market.