Prime London house prices predicted to rise 24% over 5 years

The prime central London story

Expectations that prime central London house price growth would slow to zero this year have proven premature and Savills now forecasts that the market will continue to rise for the next 18 months, extending a record two and a half years of steady, single digit annual price growth.   

The firm now anticipates price rises to average 6.0 per cent this year, 3.0 per cent in 2014, with five year growth remaining more or less as forecast, at 24.3 per cent, following uncertainty in the run-up to a general election.

Prime Central London five year house price forecast table

Despite fewer ‘big ticket’ trophy home buyers in the market, sales of properties worth £5 million or more across the market have totalled a record £2.6 billion in the first half of 2013, up 23 per cent on the same period in 2012. 

Stamp duty and associated tax rises failed to trigger the anticipated slowdown of the prime London market, but the first six months of 2013 have confirmed that the taxation of prime residential property has become a political bargaining chip.  As such, Savills forecasts that the general election in 2015 will trigger a lull in prime central London price growth, but that growth will resume in 2016 assuming no significant changes to the taxation of high value property.

“There is a clear ‘bank of London’ effect that is impacting both international and domestic buyer behaviour,” says Cook. 

 “At a global and UK level London is viewed as a relatively safe place to own property and once invested buyers are reluctant to withdraw their equity.”