The success of the prime central London market in recent years has been well documented, with the area being the first to recover following the financial crisis in 2007. While growth in this area has since been followed by others in the capital and subsequently the rest of the country, this prestigious market continues to improve. The outperformance of prime central London has meant the premium for properties in the Royal Borough of Kensington & Chelsea, over the rest of London, has increased significantly. While a decade ago average prices in the borough were 95% higher than the London average, in 2014, this has risen to 205%.
The appetite for homes in Holland Park, Notting Hill and Kensington shows no sign of abating and according to the Land Registry, the number of homes sold in the area has risen 31% in the last 12 months, with a large proportion of these to local purchasers. After several years of being outgunned by affluent European and Asian buyers, the British are back in force, and after their perfect property in this affluent enclave of West London. With the UK economy strengthening, buyer sentiment is very optimistic. In particular there is an appetite for unmodernised properties including mixed commercial and residential freeholds, flats with short leases and even entire apartment blocks.
Interestingly, many of the buyers in this market are less mortgage reliant than other parts of London with the majority of active buyers being cash purchasers, especially those buying above the £2million threshold. The introduction of a 7% stamp duty threshold for homes over this price point has had a limited impact on the market. The majority of our buyers are driven by their aspiration for finding the right home, despite the additional tax implications and we’ve even had several multiple-bid situations where prices have been pushed over the £2 million threshold with little regard for the larger costs involved as buyers pull out all the stops to secure a purchase.
In the lettings market meanwhile, the last 18 to 24 months have seen rental values remain stable with little growth in rental prices. Plentiful stock, along with more subdued levels of demand left the market skewed in the tenants’ favour, however, in recent months the market has improved and is now largely balanced between available property and demand. Michael Palmer, Lettings Manager at our Holland Park branch, comments: There seems to be an ever increasing appetite for high end rental properties of all descriptions in this West London pocket. Enquiries are flooding in from all four corners of the globe - with its elitist status and excellent transport links to the City it is ideal for many residents and investors are confident of attracting high calibre tenants quickly and are reassured of a healthy return on their investment.” As a result of this renewed activity, the number of viewings undertaken by our lettings team has risen 30% on Q4 2013, whilst the number of tenants registering per week in Notting Hill, Holland Park and Kensington in 2014 is up 55% over the same period. Average rents have started to rise, with prices achieved so far this year for flats 3.6% higher than a year ago.