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London primed for property price recovery

A recovery in prime central London property values is underway, estate agents Savills have reported.

‘Though renewed Covid-19 uncertainty will likely push the expected bounce in values further into 2022, it remains a question of when and not if prices rebound’, it said.

The average value of prime property across London increased by 3.2 per cent in 2021, more than double the 1.2 per cent seen during 2020. Some 0.9 per cent of this increase came in the final quarter of 2021, said the firm.

‘The strongest performing markets during the past 18 months have been larger homes in prime west and south west London. Against average price growth of 3.7 per cent across all of outer prime London, the price of a six or more bedroom house in west London rose by 10.4 per cent during the past year and by 15.1 per cent since March 2020. And in south west London, the same house added 9.1 per cent and 12.1 per cent respectively to its value’. 

London flats have also begun their recovery with values up, modestly, by 1.1 per cent in prime central London and 1.0 per cent in outer prime London during 2021, said Savills. 

A ‘more robust’ recovery in central London property values is reliant on a sustained recovery in international travel. Daily flights to the UK remain at two-thirds the number in December 2019, the firm noted. 

On the other hand, transactions at the top end of London’s market have been anything but subdued. ‘Last year saw 522 £5m-plus sales take place across the capital, the highest number for any year since 2013’, said Savills. ‘The total value of these transactions was £5.54bn, 48.1 per cent higher than in 2020, highlighting that confidence in the most prominent parts of London remains strong’.  

The firm forecasts growth of 24 per cent for prime central London values in the five years to 2026, meaning that by the end of the period values will have returned to their previous 2014 peak.