Prime Central London Property Value Falls show Signs of Easing

Prime Central London Property Value Falls show Signs of Easing

 

The Prime Central London (PCL) property market has been through a turbulent time in the past year. Values were already considered high and showing signs of heading downwards, when the UK’s surprise vote for Brexit firmly set the tone for small declines in values and rents. Fast forward to May/June 2017, however, and it appears there could be an end in sight to price falls across PCL.

According to upmarket estate agency Knight Frank, the average price of a PCL home in May was unchanged from April and 6.6% lower than ay 2016. In the three months to May, prices were just 0.2% lower than the same period in 2016, a much smaller decline than the 4.1% quarterly fall in the final three months of 2016.

“Signs of a slowdown in annual house prices declines and a possible halt to monthly price drops in PCL is welcome news for home-owners and investors,” said Denhan Guaranteed Rent. “Of course, a slowdown in falls isn’t the same a price rise, but it fuels hope that values will recover.”

PCL Rental Market Recovering, Too

Complimenting those signs of a potential PCL property price recovery, are signs that the slide in PCL rents is also coming to an end. Separate research from Knight Frank shows achieved rents in PCL during May, were 0.3% lower than April and 4.8% lower than a year earlier. That’s an improvement on the 5.2% year-on-year fall recorded in the final month of 2016, by the international property management firm.

One reason behind the potential improvement in PCL rent levels is that the excess of stock that has been a feature since 2015, is beginning to be secured by new tenants. In addition to that, the number of new rental properties available for rent in May 2016, fell by 6%.

The number of new tenants, meanwhile, has also risen. The number of new potential tenants registering for PCL property costing £1,000 per week or less between January and May 2017, was up 15% from the same period in 2016. For properties costing £5,000 or more per week, there was a 62% increase in the number or potential tenants.

“There is clear evidence that demand for PCL rental properties is catching up with availability, something that will be welcome news to many landlords,” said Belgravia estate agent, Best Gapp. “It might be some time yet before that slower decline becomes an increase, but again, it’s a step in the right direction for PCL investors.”

Improvements Could Be Easily Reversed

Of course, looking backwards at what’s already happened can be a reassuring, but looking ahead isn’t always as easy. Indeed, with so much uncertainty as the Brexit talks begin and a minority Government attempts to lead the country, it’s possible that prices could begin heading down again.

However, London is an internationally important and popular country and demand for homes in PCL are sure to improve in the future, even if that positive future is delayed a little by political problems and divorce negotiations.

“The PCL property market is unique, just as all prime city property markets are and that means there will always be demand to live there, in the best city regions available,” said Fulham estate agent, Lawsons & Daughters. “Most property markets go through cycles and changes and PCL is no different.”

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