Contrary to reports that investment demand in Prime Central London (PCL) residential has dissipated, Land Registry statistics for Q1 have shown that global appetite continues to grow, says London Central Property (LCP).
Sales volumes reached 6,237 over the year, the highest level since 2007, following two consecutive quarters of growth.
Property prices also continue to rise but with no sign of a so called ‘bubble’, as long term average growth continues to average nine per cent per annum.
The average price has now crossed the GBP1.5m mark reaching GBP1,552,400 whilst rolling annual price growth, which removes seasonality, was 10.48 per cent.
Compared with last quarter, sales in the core sub GBP2m sector of the market have shrunk 28 per cent and the number of transactions under GBP1m is now less than 60 per cent of the market.
“This reflects the fact that average prices are now well over GBP1m, so the lower end of the market is inevitably shrinking. It is also indicative of owners holding onto properties which are prime performers in the heartland of the private rented sector. It does not indicate a lack of appetite to buy at this level: in fact, last week a one-bedroom property in Paddington was sold by a client of LCP after six buyers competed in sealed bids. It was snapped up at 10 per cent above asking price – a clear indication that buying appetite exists, but that the best properties are few and far between”, says Naomi Heaton of LCP.
Q1 2014 also shows a positive picture for the national housing market. The average property price reached GBP251,014 following annual price growth of 3.37 per cent and a rise of 1.4 per cent over last quarter. However, prices appear to be bobbing around the GBP250,000 mark and this is actually 2.6 per cent below the price reported in Q3 2013.
However, like PCL, transactions reached their highest level since 2007 after a sharp annual increase of 29 per cent to 800,910.
Heaton says: “Prime London Central continues to show growth in line with long term trends. There is no evidence of anything out of the ordinary which should be comforting news for investors thinking of coming into the market.
“This does not appear to be the case for more domestic areas just outside the Central zone where prices are being fuelled by increasing economic confidence, more availability of credit, despite the well-publicised crack down on mortgages and Chancellor Osborne’s flagship help-to-buy scheme. In fact, in some places, prices are exceeding GBP1,000 per square foot and edging much closer to prices in PCL.
“The rest of the country is showing signs of recovery although prices are only nine per cent above the pre-credit crunch high, almost seven years ago. This data would not suggest a bubble and, indeed, annual growth rates have been much higher in the past when no such fears were ever raised, namely 16.1 per cent in 2002, 14.8 per cent in 2004 and 11.6 per cent in 2011. The national housing market tends to correct itself when circumstances dictate and it is possible that the current furore about house prices is unhelpful during a fragile economic recovery.”