House prices in “prime” central London appear to be stabilising, while areas in the south and west of the capital such as Wandsworth and Richmond are now under increasing pressure, according to estate agent Savills.
The company is predicting that average property values in central London’s top-end enclaves such as Knightsbridge, Mayfair and Holland Park will record no growth for the next two years following three years of decline.
However, Savills said there were signs parts of the market “may be bottoming out” and the prime markets of south and west London could bear the brunt of Brexit uncertainty and concerns regarding future interest rate rises. This market is defined as running from Battersea through Clapham and Wandsworth to the south, and Fulham, Barnes and Richmond to the west.
Typical prices in prime central London ended 2017 down 4% for the year as a whole, but prime south and west London experienced a bigger annual fall of 4.2%. Within this segment of the market, Fulham was named by Savills as the area that recorded the steepest falls.
Prices in Fulham fell by 4.6% in 2017 and were down more than 14% on their 2014 peak, said the company.
It means average values in Fulham, which passed the £1,000 per square foot mark in 2013, have fallen back to £890, well below Chelsea’s £1,600 average.
While studio flats in Fulham start at around £285,000 and large family houses can easily command a price of £5m-plus, according to property website Rightmove, Savills claimed the price falls “effectively reposition Fulham as a value location for those looking to make their equity stretch further than in prime central London”.
The top-end areas of south and west London were “coming under increasing pressure from fragile buyer sentiment” with purchasers feeling the constraints of tighter mortgage affordability rules, as well as unease around the Brexit process and its potential impact on employment, particularly in the financial and business services sector, said the company.
Savills has already predicted average UK prices – both prime and non-prime – would rise by 1% in 2018, which would mean property values falling in real terms.
Many commentators have pencilled in UK price growth at around that level this year. Another estate agent, Knight Frank, has also predicted price growth across the UK of 1%.
Of the two big lenders that operate price indices, Nationwide has said it expected property values to be “broadly flat in 2018, with perhaps a marginal gain of around 1%”, while Halifax has predicted UK growth in the range of 0% to 3%.