Property prices in the emerging prime hotspots of London recorded a slight increase of 1.3% in the second quarter (Q2) of 2015, down by 0.84% compared to Q2 2014, revealed new data.
Demand in South West London has continued to be fuelled by sales, particularly of flats under £937,500, following Stamp Duty changes at the end of 2014, according to the latest quarterly report by real estate company Douglas and Gordon.
Contrastingly, larger houses priced over £1.3m in emerging prime markets were less promising, due to Stamp Duty issues and concerns over the mortgage market. In some areas, such as Battersea and Battersea Park, prices were down 10% annually.
In the sector, Clapham and Southfields experienced the strongest price growth, of 3.5% and 3.9% respectively. A weak second-half of 2014 has led prices in these areas to catch up to where they were a year ago.
Rental growth is also strong, up 1.7% in Q2, continuing this market’s strong performance during a difficult year in the sales sector. However, this is expected to slow once sales pick up.
Total returns, capital and rental growth remain attractive to professional investors in emerging prime areas. Capital values are also forecast to increase by 10% in the next 12 months.
Douglas and Gordon’s Executive Director, Ed Mead, says: “Whereas there is some evidence of a post-election bounce, unsurprisingly, many are taking their time to make decisions and a continuation of the anticipated bounce needs to be tempered with a dose of realism.”1
His predictions for the next 12 months regarding family homes is that the market will remain firm, due to there no longer being a threat of mansion tax.
However, he also notes that there is a lack of supply and the firm’s emerging prime index is only back to levels seen a year ago.
He expects fringe areas to perform best, as buyers look for new areas to purchase a property in.
1 http://www.propertywire.com/news/europe/london-prime-emerging-markets-2015070710717.html