Luxury London home values have fallen by more than 49% in real terms since the market peaked in 2014, according to Bloomberg analysis of Savills data.
The Savills Prime London index is around 27% below its 2014 peak in nominal terms, following more than a decade of falling values across the capital’s most expensive housing markets.
Bloomberg’s analysis, which combines the Savills index with consumer price inflation, puts the real-terms decline at more than 49%.
If nominal values remain flat and inflation continues at its current rate, Bloomberg calculates that the real-terms fall will reach 50% during the first few months of next year.
LONG-TERM DOWNTURN
Savills does not expect nominal price growth to return until 2028.
The downturn began after changes to stamp duty in 2014 increased transaction costs for more expensive homes. Further tax changes affecting landlords, second homeowners, overseas purchasers and properties bought through companies have followed.
Brexit, the pandemic and wider political and economic uncertainty have also weighed on the prime London market.
Lucian Cook, Head of Residential Research at Savills, tells Bloomberg: “There probably isn’t the stimulus for a recovery.”
He adds that the “long awaited recovery” is being held back by both current circumstances and stamp duty.
VALUE EMERGES
The scale of the correction could, however, make London increasingly attractive to buyers.
Cook tells Bloomberg: “It means it is looking very good value.”
Savills’ Prime London index dates back to 1979 and tracks price movements among the best properties in London’s most sought-after districts.
