London Hubs Tracker: Property slowdown a myth for majority of London

News at Stirling Ackroyd | 17/05/2016


  • Majority of London market sees 8.2% annualised property price growth, even as top quarter sees 2.4% annualised fall
  • Traditional top quarter accounts for two-thirds of Greater London’s postcode districts experiencing price falls
  • Kensington High Street (W8) sees biggest annualised fall of -11.8%, followed by Notting Hill at -10% and Hampstead
  • Areas such as Soho’s W1, Sutton’s SM1 and Tottenham’s N17 now drive London property price growth instead

 
London has avoided any indication of widespread house price falls, with negative price growth confined to London’s traditional prime market. Price drops have been confined to the struggling top 25% of London’s property market – which saw negative quarter-on-quarter growth of -0.6% in Q4 2015, or annualised house price falls of 2.4%.

By contrast, if London’s old luxury postcodes are excluded, the remaining three quarters of the capital saw a 2% rise over the same period, or annualised house price growth of 8.2% for the overwhelming majority of London’s more "normal" neighbourhoods. Across the board, house prices in the capital rose by 1.6% in Q4 2015, with the average London property now worth £533,000. As a broad average this translates to a 6.6% annualised growth rate for the whole of Greater London.

Out of a total 272 postcode districts in the capital, 47 saw local drops in average property values. However 32 of these districts fall within London’s traditional prime top quarter of the property market. Within the top quarter of London’s property market, a given postcode has a roughly 50:50 chance of hosting falling house prices whereas for the rest of the capital a given postal district has a 93% probability of price rises.

Figure 1: London's top 25% property postcodes (blue) Figure 2: Property price rises (green) & falls (red), QoQ

 

Andrew Bridges, managing director of Stirling Ackroyd, comments: “Posh no longer means profitable – or at least you can no longer presume so. London’s hugely diverse property market is undergoing a serious readjustment, with the traditional old heart of ‘prime’ London under pressure from many fronts – from a low global oil price and China’s economic slowdown, to stamp duty reform and international fears of Brexit."

“Yet for most of London’s communities, these factors affecting luxury buyers are less important. There are still too few new homes coming onto the majority of the market compared to demand from a growing population – and the majority of the London market is still in tune with, and restrained, by those fundamentals. Anyone who thinks that London property is synonymous with international jet setters is only looking at a very small part of what London has to offer."

“There is also an outwards wave of interest, away from the old peaks of property prices. Within the wider spread of London home buyers, a growing band of increasingly affluent people can no longer afford the most overcrowded traditional areas of ‘prime’ London – and this demographic of professionals are redefining the map of the capital’s up-and-coming locations. New, dynamic parts of London are emerging further east, driven by a less traditionally exclusive but highly aspirational clientele.”

Read the whole report here.