London prime prices falling down"¦

PRIME residential property prices in London have fallen a further 3.6% in November after dipping 3.9% a month earlier, according to Knight Frank.

Knight Frank has also found houses are now depreciating at a faster rate than flats.

Head of residential research Liam Bailey said prices have decreased for eight consecutive months and are now 14.1% lower than last year and in the last three months, prices have fallen by 9.3%.

This is lowest rate since the index began in 1977 — in June 1990, at the height of the last slump, the annual fall amounted to just 10.6%.

He noted that in previous months super-prime properties had remained immune from the downturn, and that houses were performing better than flats.

But now neither of these trends have continued into the final quarter of the year.

“Super-prime property worth over £10 million was still increasing in value until the summer. Now, however, it has seen three months of consecutive falls and values are 7.5% lower than at the market’s peak in August. Nevertheless, properties worth over £5 million are still holding value better than cheaper homes, with values falling by 1.9% during November, compared to 4.3% for those priced at under £5 million,”

And the value of houses in prime areas of the capital fell by 4.1% in November, a greater decline than the 3.2% recorded for flats. Consequently, areas with a greater number of entire houses, such as the northern areas of prime central London, are no longer outperforming the market.

Bailey said the last few months have seen vendors gradually accepting that prices need to be cut if a sale is to be achieved.

But Bailey added these dramatic falls may be painful to vendors, but prime London property is increasingly looking like very good value, particularly to foreign buyers who also benefit from the weak pound.

“Indeed, a fall of 15% may translate to a fall of as much as 35% to someone watching the market from the USA, as the pound has fallen by 20% against the dollar since the beginning of the year. There has been an increase in interest from such buyers over the past few weeks, which has not yet been translated into activity.

“Given the overall economic situation, we believe further price falls are to come. However, as many prime properties are unique and only occasionally come up for sale, we believe activity will increase as overseas buyers realise the home they have had their eye on for some time is now available at a much reduced price,” he concluded.

Australian Property Journal