Price growth in prime central London may be slowing but lower value markets in the capital are still holding their own, analysis reveals.
Data from Hometrack reveals that house price growth in London’s lower value markets, such as Peckham, Walthamstow and Clapton, has outpaced the rate of inflation in the capital’s prime, central markets since 2009.
The research shows east London has outperformed the west between 2009 and 2017.
Walthamstow was the top performer, with prices up 133.2%, followed by 133.1% in Clapton and 129.9% in Peckham.
In comparison, growth has been slower in prime markets such as in Hampstead where price inflation was 86.9% or Fulham which registered 87.5% followed by 88.3% in Mayfair.
Markets with the highest 30% of prices saw the fastest growth in the early phase of the property market recovery pre-2012, while lower price bands only began to pick up pace from 2013 onwards, when the UK economy began to improve and mortgage rates fell.
For example, between 2009 and 2012 house prices rose by 52% in the most expensive tenth of the market, compared to just 8% in the lowest tenth. But in the three years following, the momentum for house price growth shifted, with the lowest value markets, areas such as Walthamstow, Clapton and Peckham, registering growth of 64% against just 22% in the upper price bracket, Hometrack says.
Richard Donnell, insight director at Hometrack, says: “As a global city, London’s housing market covers a wide range of sub-markets with different drivers of demand. Average values in the most expensive areas of London are five times higher than in the lowest value areas and the top three price deciles registered the highest growth in the early phase of the recovery before 2012.
“House price growth is now slowing rapidly across London. The annual rate of growth is currently 8% year-on-year in the lowest value markets, while prices are falling by 5% year on year in the most expensive markets.
“With a record high price to earnings ratio in London of over 14x, stretched affordability levels are impacting demand and reducing the upward pressure on prices. This has been exacerbated by tax changes that have dampened investor demand.”