After a prolonged period of sluggish sales, the weak pound is tempting overseas buyers back to Belgravia, Knightsbridge, Mayfair, Kensington and Chelsea, Marylebone and Notting Hill with discounts of around 35%.
The price of a luxury home in the heart of London is set to climb 20% over the next five years after a prolonged spell of sluggish sales and discounting.
According to housing market reports, prices will nudge down two per cent in the 12 months to December 2019.
However, next year will see the first annual price rise of 3% for high-end homeowners in London since 2014.
Property values are then predicted to rise 6% in 2021, 4% in 2022 and 2023, and 2% in 2025 in the capital’s exclusive locations of Belgravia, Knightsbridge, Mayfair, Kensington and Chelsea, Marylebone and Notting Hill.
A hike in stamp duty on multi-million pound homes and Brexit-related uncertainty caused prices to be slashed by a fifth on properties worth more than £2.75 million over the last few years.
These falls will now reverse as luxury dwellings appear to be good value.
Historically, a recovery in the luxury markets has been sparked in prime central London, when the city’s most expensive properties start to look good value on a world stage.
Values have been bottoming out over the past year, resulting in a build-up of new buyer registrations over recent months. This signals that the market is set for a bounce, but this is still being held up by uncertainty.
Overseas buyers to drive the recovery
With a weak pound, the recent price falls equate to a discount of around 35% for overseas property players buying in the US Dollar.
Year-on-year growth in the number of transactions in prime central London is not surprising. There is a continued faith in the medium-to-long term stability of the UK.
London has also matured as a global city and financial centre – it is still seen as a safe haven for the world’s wealthy but won’t attract the same flurry of investment.
Slow and steady for the rest of London
House price growth in Greater London’s mainstream market will be out-paced by prime central London creeping up just 4% over five years.
Prices across the capital peaked later and have seen much less of a price adjustment.
This means they have much less capacity to increase, particularly as interest rates gradually rise, when compared to both the prime London market and the mainstream market in other parts of the UK.
