London’s prime residential market has enjoyed record-breaking growth in the last two-and-a-half years, according to the latest Savills report. Over the past ten quarters, the city’s residential property index soared to a level not seen since the index was established in 1979.
Savills noted that double-digit annual price growth had not been seen since 2009 and 2010 when the wealthiest individuals shifted their assets from stocks and shares into real assets. From then on, prime London property experienced strong demand from wealthy Londoners as well as overseas buyers (comprising 34 percent), although not resulting in overheating.
Across prime London, the average price growth reached a modest 17.6 percent from end-2010. While it slowed slightly in 2012, figures for Q1 2013 were 2.2 percent higher compared to 0.8 percent in the previous quarter.
“In historic terms, this rate of growth looks steady for a prime residential market and much less volatile than some other prime world markets…It flies in the face of those who claim the market is overheating,” said Yolande Barnes, Director of Savills World Research.
“We had expected values to flatline this year, but the market, having for now absorbed the impact of new and increased taxation and the uncertainty concerning any possible future increases, continues to focus on London leading to a steady rate of quarterly growth in the first three months of this year.”
In view of unexpected declines in the value of sterling, London will likely remain affordable for buyers compared to other cities. Hence, modest levels of price growth will be sustainable, Barnes added.
Romesh Navaratnarajah, Senior Editor of PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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