High-end properties in London suffer first decline since 2003

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by Kay Murchie

A report by Savills, the estate agent, has established that prices in the prime London market have suffered their first quarterly decline since 2003.

Many experts have said that this higher end of London’s property market has been largely unaffected by recent ructions in the broader industry.

Savills said that property in London valued over £1 million had declined by 2% in the final quarter of 2007.

It is believed the reason for the fall is the absence of spending by those earning large City bonuses.

Lucian Cook of Savills said that the fall in prices had occurred progressively over the last quarter of 2007 as the impact of the credit squeeze has become evident. The market has been influenced by City bonus expectations and the outlook for job security in the financial sector.

However, Mr Cook added that the prices were holding up better than anticipated and that the small decline was no surprise and those owners who invested in substantial homes in good Central London locations will take comfort that, in spite of the late declines, prime property prices were up 16.3% on last year.

According to Savills, values in areas of southwest London, such as Fulham, Barnes, Putney, Wandsworth and Richmond, where much City cash has been spent in the last 12 months, had proved resilient.

Savills added that price growth for super-prime homes, those worth £5 million or more and usually found in locations such as Mayfair, Kensington and Belgravia, was now at 2.5%, down from 13.7% compared with 12 months ago.

Savill anticipate that this high-end prime Central London market will recover, to increase by 5% this year.

Furthermore, estate agent Knight Frank believes that prime property will slightly out-perform the rest of London, which it tips to grow by 3% this year.