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Coutts London Prime Property Index | Q2 2018

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Summary

It’s still a buyer’s market for luxury London property but prices are falling at a slower pace.

5 min read

The latest London prime property trends, how high-end house prices are doing in your part of the capital and the most popular parts of the UK for a holiday home.

-16.9%

Annual fall in prime sales volumes

-11.3%

Average discount between asking price and sale price on London prime property

-1.7%

Annual drop in London prime property prices

  • Chapter 01

    Overview

    Low prices and high discounts good news for buyers

    Half of London property worth £1 million or more is being sold at a discount with buyers getting a little over 11% off on average.

    Prices continue to fall too, albeit at a slowing pace. They fell 0.3% in the three months to June compared to a 3% drop in the first quarter of the year. They are now 1.7% lower than a year ago and 14% below their peak in 2014.

    Falling prices have boosted recent activity in the market. Sales volumes for prime London property increased 16% in the three months to the end of June despite falling by 17% since the same time last year. The number of properties under offer also rose by 11% in the most recent quarter – a sign of even more sales to come. But the amount of London prime property changing hands is still a long way off what it used to be – as little as half what it was in 2013.

    While we’re seeing high discounts generally, it’s a slightly different story for ‘best in class’ properties where competition remains fierce. Sales are often going to sealed bids for such properties and some are even setting new records.
     

    The market remains subdued

    Current conditions may be beneficial for buyers but Coutts Managing Director Mohammad Kamal Syed says that, even though the market is still falling, there are some signs it could be levelling out.

    “Prices are falling more slowly and we expect them to remain relatively flat for the rest of 2018,” he says. “The average discount buyers are getting has also dropped slightly since the first quarter which is another sign that things could be changing.

    “While London’s prime property scene remains good for buyers with a long-term investment horizon, the market is still very subdued as many sellers wait for Brexit uncertainty to pass.”

    The super prime market – properties worth £10 million or more – is behaving differently. Prices in this bracket have seen a slight increase and are now up 2.2% compared to the same period last year. The average price per square foot is now £2,658.

     

    How we can help you buy your home

    At Coutts we recognise that property is the most significant asset many of us own. We will take the time to understand your objectives and build the right team to help you make informed property decisions.

    We are able to design a lending solution tailored to your needs, or provide access to Coutts pre-selected panel of leading UK residential buying agents who can find you some of the most exceptional UK residential properties.

    To find out more about how we can help, speak to your private banker or call Coutts 24 on 020 7957 2424.

     

  • Chapter 02

    Holiday homes

    Top 10 best places to buy a holiday home in the UK

    We’ve compiled the top 10 holiday home locations based on where our clients have bought over the past two years.

    It shows the South West as the star of the ‘staycation’ as it features on the list four times, while Edinburgh City Centre is one of the most profitable with house prices shooting up 12% in 12 months*.

    Here are the most popular areas for holiday homes in the UK outside the capital (click on the arrows to scroll through):

     

    How to find the perfect holiday home

    A weekend bolt hole for your immediate family. A place for you to share with your extended family and friends. A property that’s a business opportunity as well as a place for you to get away from it all.

    Deciding what you want from a holiday home is the first step to finding a place that will be the setting for treasured memories for years to come. Our Real Estate Investment Service has helped many of our clients find the property that’s right for them.

    Find out more about the Coutts Real Estate Investment Service

    We can help you explore what type of property you want and understand its place in your broader property portfolio. When you have a good idea of your needs we can put you in touch with a specialist property service company that can help you locate the ideal place.

    Explore our range of flexible and customised borrowing solutions

    An expert’s view on buying a holiday home

    We asked Christopher Bailey, a partner at one of our property search specialist companies Knight Frank, what advice he gives to his clients.

     

    Lifestyle matters

    A holiday home purchase should primarily be lifestyle-based rather than investment-based. Thinking about the lifestyle you want is more important than the location initially.

    For example, do you want to have complete privacy and quiet or be close to a bustling town or village? Do you want to be by the coast or in the countryside? What amenities do you want your holiday home to have – equestrian facilities, a mooring, access to walking routes, etc?

     

    Do your research

    Spend time in the locations you’re considering and the surrounding area. Visit them in different seasons to make sure you would still like it there even when the sun isn’t shining. It’s also a good idea to take your family and close friends with you to gauge reactions.

     

    Think about wi-fi

    If you plan to work from the property for a day or two a week, look into the area’s broadband speed. A lot of work is being done by the government to improve rural broadband. Cornwall for example has received huge European Union infrastructure investment recently and much of the county now has super-fast broadband. The introduction of 4G has also been positive for rural locations. 

     

    Check travel times

    If commuting to London from your holiday home is important, look into travel times and any infrastructure changes that could impact your journey. In the South West, journey times are getting much better with more domestic flights to and from Exeter and Newquay. The electrification of rail lines in the area is helping too and overnight sleeper trains to Penzance are becoming more popular. 

     

    Don’t miss out on potential tax breaks

    There are tax considerations and advantages to take into account for rental income from properties that qualify as ‘Furnished Holiday Lettings’ (FHLs).  Few seem to be aware that a tax advantage is available by claiming capital allowances not only on loose items like furniture, but also on a property’s fixtures.  A correctly supported claim for capital allowances can mean an FHL will pay no tax on its rental profits for a number of years.

    Find out how Coutts can help you buy a holiday home

    The information provided is based on our understanding of the laws and regulations as at the date of publication but it is not exhaustive and does not constitute legal or tax advice. The views expressed by third parties do not necessarily reflect the views of Coutts. 

    *source – Knight Frank

  • Chapter 03

    Local trends

    A mixed bag for discounts across the capital

    The latest numbers show a mixed picture when it comes to getting a good discount on a luxury property in London. For example, two-thirds of luxury properties in Hampstead & Highgate are sold below asking price – 13% off on average – while under a third are getting a discount in Wimbledon, Richmond, Putney & Barnes. In that part of south west London, the average amount off the asking price is 7.1%.

    Property in Wimbledon and its surrounding areas is on the market for 35% less time than Hampstead & Highgate on average, showing that the market there is currently more buoyant.

    Coutts Head of Lending Propositions George Toumbev says this is just one example of some significant differences between the capital’s prime property areas.

    He says, “The numbers tell very different stories across the 15 parts of London covered by our index. Another example is that house prices in Fulham & Earl’s Court are at almost 20% less than their 2014 peaks while St John’s Wood, Regent’s Park & Primrose Hill properties sell for close to record levels.

    “There are even very different trends in areas right next to each other, reflecting the sheer dynamism of the capital and the fact that any given area very much has its own sense of identity. This underlines the importance of doing your research and really getting to know the market in the neighbourhood you’re interested in.”

     


    Got it made in Chelsea

    The most popular area this quarter for buying at the top end of the market – £10 million or more – is Chelsea, closely followed by Kensington, Notting Hill & Holland Park. Prices in Chelsea had been relatively stable since late 2016 but have now increased 5% compared to last year.

    Families looking for somewhere within reach of Chelsea could find deals in neighbouring Fulham & Earl’s Court, where the average price for prime properties is almost £750 per square foot cheaper. We haven’t seen that kind of price difference between two prime London areas since 2013.
     

    Mayfair & St James’s continue to soar

    Other key local trends include:

    • Mayfair & St James’s showing positive momentum year-on-year with prices up 14% and sales volumes up 21%
    • activity slowing in Marylebone, Fitzrovia & Soho, with prime sales volumes falling 23% compared to the same time last year, and annual price growth dropping 9%
    • buyers in Pimlico, Westminster & Victoria seeing the biggest discounts at over 14% on average

     

    How much can I borrow?

    Use our personalised mortgage calculator

    Find out here
  • Chapter 04

    Interactive Map & Postcode Selector Tool


    Use the map and postcode selector below to see how your area performed last quarter.

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Key Takeaways

Falling prices and high discounts mean luxury London property is currently a buyer’s market and it remains subdued. Outside London, the South West is the most popular place to buy a UK holiday home according to our research, featuring in our top 10 list four times.

The data-rich Coutts London Prime Property Index is one of the many tools at our disposal to help you find and buy your home – others include tailor-made mortgages and access to the UK’s best buying agents.

About Coutts Real Estate

With significant experience in the real estate market, Coutts real estate experts draw on a clear understanding of our clients' property investment objectives, extensive connections and expertise to provide a consolidated service that meets their needs.

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