More price falls have been recorded across areas of prime London according to Savills.
The pattern is not uniform – the agency says that after three years of price falls, there are signs that prime central London housing values may be bottoming out, while those in less centrally-located prime markets come under increasing pressure from fragile buyer sentiment.
It says that for the first time since June 2012, annual price falls in prime south west London have exceeded those seen in prime central London, and the pace of falls has picked up over the past three months in these popular family markets.
Values in the UK capital’s most expensive central locations slipped 0.9 per cent in the final quarter of 2017, while annual price falls totalled 4.0 per cent.
But across the more domestic prime south west area – running from Battersea through Clapham and Wandsworth to the south, and Fulham, Barnes and Richmond to the west – values fell by an average of 1.6 per cent in the last three months of 2017 and 4.2 per cent in the full year.
This makes it the capital’s weakest prime market segment.
In prime central London now, values are on average 15.9 per cent below their 2014 peak, ahead of the first significant stamp duty increase.
“But the rate of price falls has slowed and values are now finding a level” the firm says, although it admits that no growth is expected for the next two years.
Prime southwest London house prices are on average 7.3 per cent below the 2014 peak, less than half the fall seen in prime central London.
But Savills warns: “Buyers in these markets are now feeling the constraints of the mortgage market review, as well as unease around the Brexit process and its potential impact on employment, particularly in the financial and business services sector.”
It adds that Fulham – the market that traditionally behaves more in line with its central London neighbours than the rest of south west London – has recorded the steepest falls in this submarket.
Prices fell by 4.6 per cent in 2017 and are down 14.4 per cent on the 2014 peak, in line with core prime central London locations such as Knightsbridge and Holland Park.
This means average values in Fulham, which passed the £1,000 per square foot mark in 2013, have fallen back to £890, just below the £910 prime Battersea average and well below Chelsea’s £1,600.
“The prime central London market may be bottoming out, but we don’t expect a return to growth until there’s greater clarity regarding the Brexit process” says Lucian Cook, Savills head of residential research.
“A backdrop of political and economic uncertainty means the market will remain highly discretionary, while the high tax environment means that even international buyers remain reluctant to take advantage of the currency play. Our forecasts anticipate it will be two years before we see a bounce in values.”