COLUMN has been set off in prime central London when the city’s most expensive homes start to look like good value in a global context. Given that values have been bottoming out over the past twelve months, our agents working across the region have noted a buildup of new buyer registrations. Both of these factors would suggest that the market is set for a bounce back. What’s holding things back is the market uncertainty. Our forecasts for prime central London do suggest a weaker recovery than seen in previous cycles, however. There are several reasons for this: the high tax environment, the likelihood that the cost of money will gradually increase, and the maturity of London as a global city and financial centre. House price growth in more central locations will inevitably push demand to other prime locations in the capital from 2021, meaning that they too will outperform the wider London average. Markets like Battersea, Fulham, Islington and Chiswick are much more dependent on domestic wealth generation and are more likely to feel the effects of interest rate rises and the strength of the underlying mainstream markets. We’d therefore expect that these domestic markets on London’s fringes won’t reflect the same growth in prime central London and will undershoot by 11.5% over the next five years.
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