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Coutts London Prime Property Index | Q1 2019

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Summary

London luxury property prices rise slightly in the last quarter but sales hit a six-year low.

5 min read

Our latest look at London’s high-end housing market and a special report on the home counties.

-12.7%

Average discount on asking price

6

Months

Average time it takes to sell a prime property in London

-2.9%

Fall in prices since Q1 2018

  • Chapter 01

    Overview

    ‘Cautious’ is the word that sums up London’s prime property market in the first three months of the year – and the current climate is creating opportunities for buyers.

    Brought on by Brexit uncertainty and stamp duty hikes, the current apprehensive market mood means sales volumes have reached their lowest level since 2013, according to data provided by LonRes.

    Prime properties, defined as properties valued between £1 million and £10 million, are lingering on the market longer too – over six months on average. This is the longest average selling time we’ve seen for prime London property since we started this index in the summer of 2017.

    Worried that their listings will become stale, sellers are often offering steep discounts. Buyers are getting almost 13% off the asking price on average, with the biggest discounts agreed on properties with the biggest price tags. The average discount for super prime property – homes worth more than £10 million – is over 21%.

    Katherine O’Shea, Coutts Real Estate Investment Service, says foreign buyers interested in a luxury London home can get a further, currency-related boost.

    “The current status of the pound means that for dollar-denominated buyers, prime London property is about 40% cheaper than it was in 2014, and for those using euros to make a purchase it’s about 30% cheaper,” she says.

    Despite being a somewhat subdued market, prime London prices have still edged up ever so slightly – by 0.4% in the first quarter of this year. But they are 3% down on this time last year and 17% below their peak five years ago. The small price rise this quarter was driven largely by neighbourhoods a little further out from the city centre, such as Richmond and Hampstead.

    Investors looking longer term

    Those buying properties to rent out are seeing slightly higher yields across prime London markets. The latest LonRes data suggests that gross rental yields – the annual income of a property as a percentage of its purchase price – have edged upwards slightly across prime London markets. Average yields are now 3.9%, up from 3.7% in the first quarter of 2018. This small increase is mainly driven by the fall in the properties’ value over the year, but also a slight increase in rents.

    Alex Lyneel, head of mortgage proposition at Coutts, says, “Investors in London are often less focused on income and more focused on longer-term capital returns. Yield-driven investors tend to turn to UK regional cities where property prices are lower.”

  • Chapter 02

    Home Counties

    Surrey on top as Coutts casts eye over home counties

    Whether it’s driven by a desire for community, a coveted school place or fine views and fresh air – many see the UK’s home counties as the ideal place for a ‘London-lite’ lifestyle. The nearest counties to the city can bring you closer to the country while keeping the capital commutable.

    There isn’t any formal definition of the home counties, but nonetheless everyone seems to know what they are. There are several theories as to how they got their name – from them being the only parts of the UK that MPs could return to right after parliamentary business, to their status as the ‘home’ of so many London commuters. The earliest known reference is from a treatise An essay upon ways and means of supplying war published in 1695, but there doesn’t appear to be any particular reasoning behind its use.

    However they got their name, the likes of Kent, Buckinghamshire and Surrey are very attractive to luxury property buyers looking for a certain lifestyle.

    Welcome Home

     

    The home counties are:

    Buckinghamshire

    Essex

    Hertfordshire

    Kent

    Surrey

    Sussex

    Berkshire

    The most popular place and latest price moves

    Coutts analysis shows that Surrey is the most popular county for clients looking to buy just outside London. The most popular areas within Surrey are Leatherhead, Cobham and Guildford. Kent – the ‘Garden of England’ – is the next most popular county, followed by Berkshire and Hertfordshire.

    According to the Land Registry, price falls for prime property in the home counties have been relatively modest compared to the decline in London’s luxury property market. The latest data – from the last three months of 2018 – shows that prime property prices in these, often leafy, areas have fallen a little over 8% since their peak in 2013. This compares to a 12% drop in Greater London over the same period, and a 17% fall in prime London markets.

    More recently, prices in the home counties have been on the rise, up over 1% at the end of 2018 compared to one year previously. In Surrey, prices have improved by almost 6% in the 12 months to last December – although they are still some 15% below where they were in 2013.

     

    Be mindful of country complexities

    Katherine says seeking a country home or estate, in the home counties or elsewhere, often involves thinking about much more than the price.

    “Buying a country home has added complexities compared to city living, such as public footpaths and rights of way, as well as any other planning policies that could directly impact the value and enjoyment of your new home,” she says.

    “The potential implications of such planning regulations, as well as any local environmental or transport-related issues, are vast. Is the property on a flight path? Could nearby land one day be developed for industrial use? Understanding all this is key to ensuring you enjoy living there for many years to come.”

    Helping you buy your home

    Coutts can help you find your dream home anywhere in the UK.

    We can introduce you to professionals experienced in finding property to ensure you are aware of a host of suitable opportunities – both on and off the market.

    Our agents are skilled negotiators who aim to secure property on the best available terms and place you, whenever possible, in a ‘preferred purchaser’ position.

    Coutts also offers a range of flexible lending options tailored to your situation.

    To find out more, speak to your private banker or wealth manager, or call Coutts 24 on 020 7957 2424.

    Your home or property may be repossessed if you do not keep up repayments on your mortgage. 

    Over-18s only. Terms and conditions apply. You may not be eligible for all Coutts mortgage solutions. Security may be required.

  • Chapter 03

    Local trends

    Such low levels of sales activity across prime London make it very challenging to analyse trends, but there are some themes we think worth highlighting.

    Prime properties in Knightsbridge & Belgravia are over 28% cheaper than they were in 2014. This has led to an increase in sales activity over the last three months as buyers swoop to snap up bargains.

    “The current status of the pound means that, for dollar-denominated buyers, prime London property is about 40% cheaper than it was in 2014, and for those using euros to make a purchase, it’s about 30% cheaper.”
    Katherine O’Shea, Coutts Real Estate Investment Service

    At the other end of the spectrum, a handful of high-priced deals in Bayswater & Maida Vale have pushed up average prices. We are also seeing price rises and faster sales in Wimbledon, Richmond, Putney & Barnes – where prices are up over 3% – and Hampstead & Highgate – where they’re up over 5%. This has been driven by demand for a more suburban, domestic lifestyle from UK buyers compared to the more urban areas covered by our index.

    Fulham & Earl’s Court has been one of the worst-hit areas in terms of prime property sales volumes. Echoing the London-wide trend, transaction volumes there are at their lowest in six years.

    Elsewhere, Pimlico, Westminster & Victoria are good areas to get a discount. Two-thirds of prime property there is being sold for a reduced sum, with buyers getting an average of 14% off the asking price.

    And Mayfair retains its title as the most expensive area to buy in the capital, with prime property changing hands for £2,059 per square foot on average.

  • Chapter 04

    Interactive Map & Postcode Selector Tool


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

Key Takeaways

Luxury property in London is still a buyers’ market, with sales at a six-year low and properties staying on the market for over six months. Buyers are getting almost 13% off the asking price on average, and the current status of the pound means foreign buyers can get an even better deal.

Surrey is the most popular county for clients looking to buy a place just outside London, according to our analysis. High-end property prices across the home counties have fallen less drastically than in London – down 8% in six years compared to a 17% drop in the capital.

Coutts can help you find and buy your dream home by introducing you to professionals experienced in searching for property, and by offering flexible lending options.

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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