Super-prime properties continue to shrug off downturn
Nearly a year into the global downturn, and super-prime properties in London worth more than £10m (€12.7m) continue to defy the price falls which are affecting homes under £3m.
The latest monthly survey from top-end London-based estate agent Knight Frank, showed that the very top end of the residential market is becoming increasingly divorced from the rest of the housing market.
Liam Bailey, head of residential research at Knight Frank, said: "Over recent months, we have noted that the super-prime sector has been untouched by the downturn. In July, it has become apparent that the value of properties worth more than £10m are becoming even more divorced from the rest of the market, rising by 1% over the month. Super-prime annual growth now stands at 16.7%.”
Properties under £3m however, are now worth up to 2.6% less than they were in July 2007.
Bailey added that sales volumes have been a particular victim of the slowdown. Almost 50% fewer homes were sold in prime central London in July compared to the same month in 2007. New instructions have also fallen, and properties are now achieving on average less than 95% of their asking price.
Nevertheless, despite prices having fallen by 4.7% over the last three months, the largest quarterly fall recorded in the history of Knight Frank's index, the drop has still not yet wiped out the value gained in 2007, and annual growth is still positive at 1.8%.
Some areas in London are weathering the storm better than others. The northern area of prime central London – from Mayfair to St John’s Wood – is showing slightly positive growth of 0.6% over the last month.
Bailey said there were signs of hope despite drops in value. He said: “Despite the current gloom, there are signs of life in the wider market. Properties are now staying on the market for less than 60 days before sale – the lowest level for six months. This may indicate that vendors are finally becoming more realistic and accepting the new market conditions.”
Knight Frank believes the situation is unlikely to change until the mortgage market eases and the economic outlook improves. Therefore, further price falls are probable – confined to single figures if the market begins to ease, but potentially more significant if the global outlook deteriorates.
Prime central London is taken to include: Mayfair, St John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and the South Bank from Westminster Bridge to Tower Bridge/Shad Thames.
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