Savills has revised its market forecast for the enclaves of prime central London and now says prices will fall by 2.0 per cent during 2020.
This is despite what the agency describes as a “noticeable uptick” in activity last month and overseas enquiries picking up “dramatically” in recent weeks.
Savills predicted last year that 2020 would see price growth in the most expensive areas of central London; it still anticipates that between now and the end of 2024 there will be 15.7 per cent price growth, but that will come after a 2.0 per cent fall this year.
“Historically, prime central London leads the UK recovery, recovering rapidly once prices look good value on a world stage” says Lucian Cook, Savills head of residential research.
“With over £1.1 billion spent in the market [for properties priced] over £5m in the first quarter, some 25 per cent above the average in the preceding five years, we appeared to be at that point in the cycle immediately pre-Covid” adds Cook.
“But despite a noticeable uptick in June, with that figure falling closer to £500m in the second quarter, it is clear that many overseas buyers are yet to return to the market though enquiries have picked up dramatically over recent weeks.
“Furthermore, the pandemic has chipped away at the wealth of those who buy in these rarified markets and, given the impact on the global economy, weakened the prospects of global wealth generation. So, while we expect London to continue to attract safe haven investment as the market reopens fully, the rate of price growth will be slower than in previous upturns.”
The agency says that the March 23 lockdown had an immediate effect on prime central London, triggering price falls of 1.1 per cent in the second quarter.
And Cook adds: “While the stamp duty holiday announced this week by the Chancellor is unlikely to have a material impact on decisions in this part of the market where values average around £4.5m, when viewed in combination with the pre-announced overseas buyer’s surcharge due to be introduced in April 2021, it may act as a fillip to market activity in the run up to the end of March.”