London prime property market set for recovery
With the capital in lockdown for the majority of 2020 and many wealthy individuals fleeing the capital in favour of luxurious country houses in which to while away lockdown, it has been a mixed year for the prime London property market. While annual price growth across Greater London reached around 4% in 2020, prime property prices fell by between 2 and 4%. Prime central London postcodes suffered the most, with prices within the W1J postcode (covering Mayfair and St James’s) tumbling by 40% during the crisis, and Kensington’s W8 postcode suffering an 18% fall, according to estate agents Astons.
The firm cited a number of factors that it believes has contributed to this decline in house prices in some of London’s most exclusive neighbourhoods. Firstly, the Stamp Duty holiday has not incited as much demand among buyers of luxury homes as it has within the general population; moreover, foreign investment has been dampened by the travel restrictions which have now been in place for the best part of a year.
How has buyer behaviour changed?
Buyer priorities have been changing across all segments of the property market, and the London prime market is no different. Instead of luxury penthouse apartments in prime central London, buyers are now looking for larger properties in the leafy suburbs, with facilities such as private gardens, home gyms and swimming pools, enabling them to stay isolated from other residents.
Estate agents Benham and Reeve conducted research on the most popular London areas for buyer demand above £2m in 2020, and found that just one prime central London area (Holland Park) made the list at spot number 10, with the most popular nine as follows:
Moving further afield
But wealthy Londoners are also opting to move even further afield – including our very own counties of Hertfordshire and Essex, which we profiled extensively in our 2020-21 Private Wealth Guide. According to a survey undertaken by Hamptons International in July 2020, the most popular location for exiting Londoners was the borough of Broxbourne, Hertfordshire (encompassing Cheshunt, Hoddesdon and Waltham Cross). In neighbouring Essex, Epping Forest and Thurrock were also reported to be popular options. Later research by the estate agents revealed that Stevenage in Hertfordshire saw a 12% increase in homes bought by those fleeing London – a higher increase than any other local authorities across the two counties.
Cause for optimism
However, with the vaccine programme well underway and further details about England’s exit from lockdown due imminently from the government, London’s fortunes could be about to change. Dexters, London’s largest independent estate agency group, has forecast that house prices for prime central London property could rise by 2-3% in 2021. Meanwhile, Beauchamp Estates has predicted growth of 1-2% in central London prime properties valued over £10m and Chestertons forecasts a 2% increase in some of the capital’s higher-value locations.
A huge surge in the number of £5m+ property transactions in Q3 2020 has also given experts hope for recovery, with Savills reporting 95 purchases in the three months to September 2020 (17% up from 2019) and a total spend of £876m. It is, according to the luxury estate agency, “a testament to the underlying appeal of central London property to the world’s ultra-high net worth community.” In a research article from November 2020, Savills said that the recovery of the prime central London property market is a case of “when, not if”, predicting 17.5% growth in prime central London capital values by 2024.
Watching with interest
From our offices in the heart of the City of London, our London Residential Property team has been watching the market with interest over the past year, and is delighted to see that recovery is well on its way. Meanwhile, our private wealth experts have been pleased to see the rich property markets of Hertfordshire and Essex receive the attention they so thoroughly deserve from elite homebuyers. For an in-depth overview of the Herts and Essex property landscapes, take a look at our 2020-21 Private Wealth Guide for more information.