Coutts Latest Index Reveals Fall in London Prime Property Prices

Coutts Latest Index Reveals Fall in London Prime Property Prices

  • Price falls in Q3 eliminate gains made in the first half of the year
  • Prices are now 15.2% cheaper than they were in 2014 at the height of the market
  • The average discount on asking price stands at -10.3% – the lowest figure in two years
  • Prime central locations see prices rise

Luxurious Magazine luxury travelThe latest Coutts London Prime Property Index reveals prices are now 15.2% cheaper than they were in 2014 at the height of the market and the three months to the end of September has cancelled out the price growth in the first half of the year.

Coutts Index reveals price falls in Q3 eliminate gains made in the first half of the year.

The number of properties coming onto the market remains low. The number is down -10.5% down on last year and -45.2% below the 2014 peak, making it a challenge to find new stock. Katherine O’Shea, Director, Strategic Solutions said that “increasingly, this is driving buyers to other, creative ways of finding their ‘dream property’, often using a buying agent with access to properties that may not be on the open market.”

Despite revealing a flatlining on price, the Coutts study does show that sales activity was up 10.3% compared to the previous quarter. Quarterly sales were the highest since the end of 2017. Alex Lyneel, Strategy Director in Coutts’ Home Buying team, suggests, “that patience may be running out for sellers who have been holding off in the hope of a recovery in prices, with buyers snapping up properties at attractive prices. This has been particularly true for foreign buyers who have the added advantage of a weak pound.”

The Index revealed how the average discount on asking price across London also continues to fall and now stands at -10.3%, the lowest figure seen in two years. The largest of these discounts are being negotiated on the higher value properties with super-prime properties (£10m+) seeing around 15.2% coming off the asking price.

Prices are now 15.2% cheaper than they were in 2014 at the height of the market

Despite this, the prices in central locations remain strong, something Lyneel suggests is “no surprise”. “The highly desirable prime property heartlands – Mayfair & St James’s, Knightsbridge & Belgravia and Kensington, Notting Hill & Holland Park – will continue to attract buyers above the outlying areas. Prices in these prime central markets increased this quarter compared to the quarter before. On an annual basis, prices in Mayfair & St James’s, for example, are up 11.1%”.

The most recent Coutts London Prime Property Index does outline a declining market, but the overarching question is “have we hit rock bottom?”

Alan Higgins, Chief Investment Officer at Coutts, concludes: “The two biggest risk factors we’ve seen for property investment have been raising taxes and ongoing uncertainty surrounding Brexit. While the 3% surcharge for investment property is likely to remain in place, there are now reasons for optimism regarding a potential bottoming of the market.”

“Firstly, we expect Brexit to be resolved over the coming months, likely with a deal. Should this happen, we believe that overseas investors could be encouraged back to the UK market, attracted by very low sterling exchange rates that make UK properties a particular bargain for the non-sterling buyer”, Higgins said.

Additionally, Higgins said “there is evidence to support our ‘low for longer’ view on interest rates. In the US, a bellwether for global markets, short-term rates have peaked already at below 3%, indicating that the global structure of rates is much lower than previously thought. We believe that this low global interest rate structure could be a key long-term support for real estate.”

The full report can be read here.

Regional property breakdown

  • Islington & Hampstead: Held up well since 2014, with the market dominated by buyers looking for family homes. Prices in Hampstead &
  • Highgate is just -3.5% below the peak and in King’s Cross & Islington, just -4.5% lower than five years ago.
  • Battersea, Clapham & Wandsworth: Prime properties here are taking 165 days to sell on average.
  • Bayswater & Maida Vale: Lack of stock continues to be a challenge in this area, and new instructions have almost halved compared to 2014.
  • Chelsea: Over half of property here is sold at a discount to asking price, with buyers on average negotiating -12.9% off.
  • Fulham & Earl’s Court: Although higher than 12 months ago, prime property prices in this area fell in the last quarter and are now -22.0% cheaper than the peak of 2014.
  • Marylebone, Fitzrovia & Soho: Prime property sales fell -32.2% in the last year and are down nearly 50% compared to peak activity levels.
  • Hammersmith & Chiswick: Buyers in this area are grappling with fewer properties on the open market, with stock levels down -37% compared to the end of 2017.
  • Hampstead & Highgate: Prices in Hampstead & Highgate are just -3.5% below the peak, although a lack of new instructions, which are significantly down on previous years, is presenting a challenge for buyers.
  • Kensington, Notting Hill & Holland Park: Lack of stock continues to be a challenge for buyers in this area as new instructions have halved compared to 2014.
  • King’s Cross & Islington: Prime property prices here are just -4.5% below the peak; a lack of new instructions will be a challenge for buyers as there are significantly fewer compared to previous years.
  • Knightsbridge & Belgravia: Sales volumes here are -43.1% lower than what they were in 2013.
  • Pimlico, Westminster & Victoria: The number of properties available for sale continues to slide – there are -31.2% fewer properties on the market now than there were at this time two years ago.
  • South Kensington: Sales volumes here are 42.5% lower than they were in 2013.
  • St John’s Wood, Regents Park & Primrose Hill: Sales are relatively slow here, with prime property taking 155 days to sell, on average.
  • Wimbledon, Richmond, Putney & Barnes: Buyers here will find the lack of stock available for sale to be a major challenge – new instructions fell -75% in the last two years.

More more articles on the London and UK property market here.

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