Price drops have been confined to the struggling top 25% of London’s property market.
The majority of London’s homeowners have avoided house price falls, with negative price growth confined to London’s traditional ‘prime’ market.
Stirling Ackroyd research suggests price drops have been confined to the struggling top 25% of London’s property market – which saw negative quarter-on-quarter growth of -0.6% in Q4 2015, or annualised house price falls of 2.4%.
By contrast, if London’s old luxury postcodes are excluded, the remaining three quarters of the capital saw a 2.0% rise over the same period – annualised house price growth of 8.2% for the overwhelming majority of London’s more ‘normal’ neighbourhoods.
Across the board, house prices in the capital rose by 1.6% in Q4 2015 – with the average London property now worth £533,000.
As a broad average this translates to a 6.6% annualised growth rate for the whole of greater London.
Out of a total 272 postcode districts in the capital, 47 saw local drops in average property values (a 17% minority).
However 32 of these districts – or an overwhelming 68% – fall within London’s traditional prime top quarter of the property market.
Within the top quarter of London’s property market, a given postcode has a roughly 50:50 chance of suffering falling house prices (48% of 67) whereas for the rest of the capital a given postal district has a 93% probability of price rises.
Andrew Bridges, managing director of Stirling Ackroyd, said: “Luxury no longer means profit – or at least you can no longer presume so.
“London’s hugely diverse property market is undergoing a serious readjustment, with the traditional old heart of prime London under pressure from many fronts – from a low global oil price and China’s economic slowdown, to stamp duty reform and international fears of Brexit.
“Yet for most of London’s communities, these factors affecting luxury buyers are less important.
“There are still too few new homes coming onto the majority of the market compared to demand from a growing population – and the majority of the London market is still in tune with, and restrained, by those fundamentals.
“Anyone who thinks that London property is synonymous with international jet setters is only looking at a very small part of what London has to offer.”
“There is also an outwards wave of interest, away from the old peaks of property prices.
“Within the wider spread of London home buyers, a growing band of increasingly affluent people can no longer afford the most overcrowded traditional areas of prime London – and this demographic of professionals are redefining the map of the capital’s up-and-coming locations.
“New, dynamic parts of London are emerging further east, driven by a less traditionally exclusive but highly aspirational clientele.”
Areas within the W postal area include Kensington High Street (W8) which experienced the most precipitous quarter-on-quarter decline of 3.1%, or an annualised rate of falling house prices reaching 11.8%.
Despite this drop, the area still boasts an average house price of £1,779,000 and follows a local 0.5% rise in W8 property prices (2.0% annualised) in the previous quarter, highlighting the recent change in fortunes of the area.
Notting Hill (W11) and Chiswick (W4), also within the W area, also saw large quarter-on-quarter property price falls, of -2.6% (-10.0% annualised) and -1.9% (-7.3% annualised) respectively, taking average prices here to £1,523,000 and £952,000.
In third place with property price falls of 2.4% QoQ (down 9.2% annualised) is NW3, centred on Hampstead.
Bridges added: “London’s luxury postcodes are far from invincible, and while these areas will probably rebound in time, the latest blip should act as a healthy reality check – to dispel any assumptions about the top London locations for rising house prices. Cities shift – and as London grows and evolves, the capital will never be static.
“Old heroes such as Kensington and Hampstead are all feeling the housing market heat, but these places are not the norm. Negative house price growth in certain districts is hiding a more positive picture.
“Overall, London’s housing market is strong and shows no sign of easing up or losing momentum. Later this year, establishment figures of the property landscape might regain their strength; it may be a simple case of post-June investment rises.
“Or it might be that underlying demand is changing course – and heading to fresh parts of the capital.”
