After several years of continued price falls, signs are pointing towards the housing values in prime housing in Central London bottoming out. The values in the most expensive central locations in the British capital slipped by 0.9% in last year’s final quarter. Meanwhile, the annual price fall has totalled to -4% – definitively in line with industry expert expectations.
A research conducted by Savills view that central London’s prime market is quite ahead when it comes to market condition adjustments. The values are about 15.9% below the peak recorded in 2014. However, the price fall rate has significantly slowed down and it is clearly showing that values are at present, finding a certain level. Of course, it is still predicted that the next two years will still be a no-growth time for the market.
Meanwhile, domestic prime markets out of London have not experienced the same fall in their values compared to what the central locations have experienced recently. However, there are small falls that are expected to occur this year and this could significantly affect the house price growth for the next five years.
For the sellers and the buyers though, the only important question is what will happen next.
Predicting the movement of house prices is not an exact science and it is never an easy one too. It is not a completely straightforward process as several factors tend to hold sway over how the numbers are going to come out. The present economic and political uncertainty which serves as a backdrop of the UK property market only serve to magnify these challenges. Getting things right would mean predicting the policy direction right or making the appropriate assumptions in the economy, as well as being able to anticipate buyer sentiment, which in itself, can be quite fickle in nature.
For the UK real estate market though, taking into the fact that it has experienced some double-digit falls since the increase in stamp duty implemented in 2014, the prices for the prime houses in central London seems to be finding a level.
Of course, one still needs to factor in the impact of Brexit over the entire market and it is predicted by experts that this will lead to two more years where there will be no growth. After this period, however, it is expected that the uncertainty will considerably clear and these prime residential areas are going to start representing good value again and prices are expected to bounce.
It is also expected that by 2022, the values across the most established prime zones in the city will have experienced a 20.3% rise. The risks seem to be overplayed about London’s position in being a global commercial centre. Regardless of the challenges that other cities will present, the UK capital will remain a critical financial centre and will develop into one of the many hubs in Europe in terms of the tech sector.
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