Luxury London suburbs are the new property hotspots
House price growth in posh London suburbs has outperformed growth in super-prime central London for the first time since the financial crisis. We're used to the fact that Belgravia, Knightsbridge and Chelsea detached entirely from property woes around the country to deliver double-digit growth year after year. However, recent months have seen the price of properties in the most expensive areas areas stutter. Meanwhile house price growth in the fanciest suburbs has taken off.
So what's going on?%VIRTUAL-SkimlinksPromo%
The trend was highlighted in a new report by Savills. It found that growth in the most expensive parts of the city have slowed to just 2.5% in the first six months of this year - constituting a serious slowdown from the 12% growth in 2013.
Why?It concluded that the slowdown had been prompted by changes to stamp duty on properties worth more than £2 million and tweaks to the wider tax regime - making it harder for buyers to cut their tax expenses on a property. These tax changes, Lucian Cook, Savills UK head of residential research, says: "have left some prime London markets looking fully valued and sensitive to shifts in both overseas and domestic buyer sentiment."
He added: "These results suggest that the spectre of interest rate rises, and in some parts of the market more constrained mortgage lending, is beginning to impact on buyer sentiment and constrain prices even in markets rich in equity. We now expect values to plateau in locations that have seen the steepest price rises as buyers apply the brakes on further increases for a period."
A report from Knight Frank in May also concluded that one of the reasons for the slowdown was the fact that property had reached such incredible prices. It highlighted that the number of viewings before an offer is made on a property have risen 70% in a year - as buyers take their time before parting with ever-increasing sums of cash.
Meanwhile, however, Savills prime regional index reveals that prices in the most exclusive suburbs continue to rise. Overall, they rose by an average of almost 6% in the previous year. However, in the prime London suburbs such as Esher, Cobham and Weybridge in Surrey, Rickmansworth in Hertfordshire and Lockswood in Bromley, growth is much faster - in the first six months of this year prices here have risen almost 6%.
The company says this is a result of the fact that wealthy buyers are moving out of London. This could be a sign that buyers are looking to cash in on the growth in more central areas at what they feel is a peak.
It may also be that the sheer scale of price rises have left even the very wealthy struggling to afford central London prices, so those who want more space and a better lifestyle are finding themselves moving further out to achieve it. When you consider that the average house price in prime central London is now £3.6 million and the average price in prime commuter suburbs is £1.9 million, it's easy to see why even multi-millionaires are thinking twice about city living.
But what do you think? Would you rather live in a £6 million 6-bedroom house in Esher (with an annex and a swimming pool) or a £6.5 million three-bedroom flat in Mayfair? Or does the idea of spending £6 million on any house leave you cold?