The average Prime London home has risen in value by £95,000 in the past twelve months – however house prices in cheaper Balham have jumped £152,000 over the same period.
With property prices in Outer Prime areas of the capital typically 25% lower than the wider Prime London average, stronger demand for more affordable homes has pushed the rate of house price inflation up in suburban ‘villages’.
House prices in Outer Prime London climbed 9% during 2014, compared to a 4.3% annual increase in Prime Central areas.
Favoured by first-time buyers and young families, Balham witnessed the steepest annual growth during 2014 – closely followed by leafy Brook Green where property values are now 19% higher than a year ago. In contrast, average prices in exclusive Prime Central enclaves of Kensington and Holland Park have grown 8% in the past twelve months.
Peter Rollings, CEO of Marsh & Parsons, said: “The prestigious prime property bastions of Kensington, Chelsea and Holland Park will always command worldwide appeal from buyers – however everyday demand for more affordable homes has catapulted Balham and other Outer Prime corners of the capital onto the map.
“Londoners are increasingly willing to compromise on a central location in return for more living space and manageable price tags, and as a result the price growth seen in green ‘village’ suburbs has overtaken the Goliaths of London property this year.”
However, the majority of this house price growth occurred in the first half of 2014, and in the last three months, Prime London property values declined 1.6%.
This is the first quarterly price drop witnessed for three and a half years, as the market corrects after remarkable growth seen throughout the first half of 201 .
An uplift in the supply of Prime London properties on the market in the last three months of 2014 has helped normalise house price growth. Competition for available homes on the market has eased as the ratio of registered buyers per property dipped during Q4 from 12 in September to 11 in December.
Already in 2015 there are indications that activity has picked up, which will kick-start further price rises, albeit at a calmer pace than last year, with annual growth of 3-5% expected across the capital. As of January, there are 13 buyers to every available Prime London property, as demand intensifies in the New Year.
Rollings added: “The end-game over the past year shows significant house price growth, but this hasn’t followed a simple straight line course. Property markets usually follow a cyclical pattern, and the first half of 2014 saw a strenuous uphill charge of house price growth, as buyers jostled elbow-to-elbow for the best properties. In the summer, values reached their pinnacle, and growth then plateaued.
“More recently, prices have backpedalled, but this slight hiatus is merely returning growth to more solid and stable ground.
“Buyers have been given some respite from heated trading conditions, and sellers are still achieving 96% of the asking price. After this breather, we expect growth to begin climbing again in 2015, and already there’s been a New Year boost of buyer demand to set the wheels of activity firmly in motion.
“While we don’t expect values to fall any further, price growth is likely to remain stable for the opening months of the year. But after the general election, activity volumes will be turned up, once political uncertainty is put to bed.”
