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Prime London property prices are trending up

While prime London property prices have remained largely flat on a year-on-year basis, many are starting to return to the capital’s top tier, with some postcodes seeing average sale prices climb by as much as 114%.

This was revealed in research by debt advisory specialists Henry Dannell, which analysed sold price data for prime London property sales above £2 million across 51 of the capital’s most prestigious property postcodes.

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“There’s certainly a renewed sense of confidence across prime central London and early indicators suggest that 2022 should be a very positive year for this segment of the market, with an uplift in foreign buyer demand likely to be the most significant influence behind an anticipated revival in both transaction levels and sold prices,” Geoff Garrett, director of Henry Dannell, said.

“We’ve already seen the foundations of this market revival being laid in 2021, with the majority of postcodes registering an increase in sold price values, some doing so quite significantly,” he added.

Henry Dannell’s research shows that London’s high-end homes commanded an average selling price of £3,229,509 in 2021, down when compared to 2020, albeit by a marginal -0.8%.

With this segment of the London market expected to make a strong return in 2022, the analysis from Henry Dannell suggests a number of prime postcodes have jumped the gun, having enjoyed significant house price increases over the last year.

This is most evident in Camden’s WC1A postcode, where the average sold price for over £2 million-properties increased by 114% between 2020 and 2021. The borough’s southern tip is also home to the second largest increase, with the WC1N postcode seeing the average sold price increase by 55% on an annual basis.

Westminster’s W1W (35%) and SW1H (34%) postcodes have enjoyed the next largest uplift in prime London sold prices, with the SW5 postcode in Kensington and Chelsea (28%) and the SW1P (26%) postcode, again in Westminster, also seeing increases of over 25%.

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A further 25 prime London postcodes have seen positive movement where the average sold price for homes at £2 million or above is concerned.

However, the same can’t be said for the entirety of the capital’s top tier market, with some postcodes seeing a reduction in average sale prices of up to -71%.

Henry Dannell said a reduction in demand from wealthy foreign homebuyers has caused the prime London market to struggle in recent years, initially due to a prolonged period of political uncertainty spurred by Brexit and, more recently, the pandemic-imposed travel restrictions.

“Unfortunately, some areas have yet to recover and sharp declines at the other end of the market have wiped a considerable amount of value from the average home,” Garrett said.

“Of course, this isn’t unusual in a low volume, high-value market like prime central London, where homebuyer preferences are very much influenced by the current flavour of the month. This shift in the popularity of a given neighbourhood can result in a drastic shift in property sold prices across that particular cluster of neighbouring postcodes.”

By Rommel Lontayao

Source: Mortgage Introducer

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Super-prime tenancies rebound in the second half of 2020

Super-prime tenancies, that’s tenancies with a £5k+ pw rent, have seen a resurgence during the COVID-19 pandemic with the period between July and December 2020 being the most active in the past seven years.

In total there were 137 such tenancies taken out in London during 2020 – this was down 11% on the 154 taken out in 2019. However, following the onset of the pandemic this changed with 87 tenancies agreed in the last six months of the year.

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It underlines how demand has not been dented by the pandemic, according to Tom Smith, head of super-prime lettings at Knight Frank.

He said: “A big driver in recent years has been the rates of stamp duty in the sales market and it is still a big motivation for tenants.

“That rationale is still there and will arguably grow with the extra 2% surcharge that overseas buyers will have to pay from April.”

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However the market is now being hit with a lack of supply in areas such as Chelsea, Notting Hill and St Johns Wood.

Smith said that this may improve in the coming weeks as lockdown restrictions continue to ease.

He added: “We are now having conversations with owners who say they would be open to either a sale or a letting and some strong offers are coming through in the sales market now.”

By Ryan Fowler

Source: Mortgage Introducer

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Prime property remains robust throughout pandemic

The UK’s prime property market is evolving rather than suffering through the pandemic according to new data from wealth manager and private bank Coutts.

The bank’s client-data demonstrated a rise in buying activity in main homes, second homes and investment properties when compared to previous years.

Outside of London, which remains the UK’s largest prime market, the south east was the most popular area for new mortgages for main homes, particularly Kingston upon Thames, Guildford and Oxford.

Coutts’ data also suggests a renewed interest in the staycation with more people looking to secure a ‘home away from home’ to provide a change of scenery during lockdown.

The biggest increase in purchases during 2020 was of holiday homes, which increased by 43% in 2020 compared with the year before.

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The most popular locations being the south east and south west of England, with Guildford and Tunbridge Wells proving popular in as well as West Cornwall and Gloucester.

Peter Flavel, chief executive at Coutts, said: “I know from my conversations with our clients over the last six to eight months that many are reassessing how they live and work.

“A lot of them are looking at their homes thinking about whether they match up to their lives today.

“Our clients have found that their homes have increasingly had to become school rooms, workplaces and social spaces. It’s not surprising that they’ve been looking for more space.”

“Schools will go back, and restaurant and pubs will re-open.

“But working from home could be here to stay, and the home cinema could be about to take the place of the multi-plex in many people’s lives.

“This could make smaller properties less attractive.”

The government plans to introduce a 2% stamp duty surcharge for foreign buyers of UK residential property from 1 April, which Coutts suggests will provide added impetus for overseas investors to transact in Q1.

The stamp duty holiday deadline will also prompt strong demand in Q1 as investors rush to beat the deadline, according to the bank.

Across prime London, there are 16.2% more properties under offer now compared to a year ago, and Coutts believes a lot of this demand is being driven by buyers looking to transact before the SDLT holiday ends.

Alan Higgins, chief investment officer at Coutts, added: “The market will need time to adjust to these changes and we could see a softening in demand in the second quarter as a result.”

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But long-term, the bank believes the momentum seen towards the end of 2020 continue throughout the year ahead, largely down to social changes and a favourable macroeconomic environment.

Higgins added: “Firstly, the uncertainty with respect to Brexit is largely in the past.

“Secondly, we expect a V-shaped economic recovery as the vaccine distribution progresses.

“And thirdly, we should the release of pent-up demand from buyers and sellers who put plans aside during lockdown.

“In the meantime, low interest rates make financing cheap, and returns attractive compared to other assets for investors.

“We expect close to zero rates in the UK for the next few years at least.

“The Bank of England’s Monetary Policy Committee is likely to ignore any rise in inflation and focus on reflation, and this is the main positive factor for residential property.”

By Jessica Nangle

Source: Mortgage Introducer

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