While the top end of the housing market has remained resilient, price growth has been put on hold given uncertainty surrounding the general election, according to the latest analysis from Savills.
Frances McDonald (main picture), director of research at Savills, says: “Despite the short odds on a change in government and continued market activity, the general election has resulted in a degree of caution in the market, with some prime buyers opting to wait-and-see how the events of the next couple of weeks unfold before firming up plans.”
PRIME CENTRAL LONDON vs OUTER PRIME LONDON
“Furthermore, there is little evidence to suggest that we will see a flurry of stock coming onto the market, as many of those affected by non-doms changes are likely to retain their base in the capital.
“However, it is likely this will act as a drag on demand and the pace of recovery, with an expectation that value will ebb and flow as proposals work their way into law.”
Across other more domestic prime markets in London, values remained steady with prices essentially flat both on the year (-0.1%) and the quarter (0.1%).
Values here have been underpinned largely by strong needs-based demand for family homes, a relatively stable mortgage market and limited available stock, particularly in locations such as Fulham, Putney and Victoria Park, with a several big-ticket transactions taking place over the last couple of weeks.
REGIONAL MARKETS OUTPERFORM
Beyond London, prices fell marginally on the quarter by -0.4%, taking annual falls in value to -2.7%. These are the markets which saw the strongest growth during the mini housing market boom of 2020 and 2021.
“Here, too, some buyers have put plans on hold as they await an interest rate cut announcement and, in some cases, clarity around future school fees. “However, despite a shallower pool of demand, there have been enough committed buyers to keep the market moving,” says MacDonald.
Across all regions, urban markets are outperforming surrounding more rural areas, as pre-pandemic trends continue to unwind, and buyers prioritise amenities and connectivity. Prime values in cities (-1.7% year on year) and towns (-2.2%) falling less significantly than villages (-2.9%) and other rural locations (-3.2%).
He adds: “Labour’s plans to introduce VAT on private school fees could see more demand filtering into the state and grammar school systems which may, in turn, increase the house price premiums we already know are evident around high performing state schools.”
Headline price movements by region
|
PCL |
North West |
South West |
West |
North & East |
All prime London |
|
|
Quarterly growth, Q2 2024 |
-0.4% |
0.1% |
0.0% |
-0.3% |
0.5% |
0.0% |
|
Annual growth |
-0.9% |
-1.0% |
-0.6% |
0.5% |
0.8% |
-0.3% |
Source Savills prime London index, Q2 2024
|
Q2 2024 |
Suburban |
Inner Commute |
Outer Commute |
Wider South |
Midlands/ North |
Scotland |
Wales |
All Prime Regional |
|
Quarterly growth, |
-0.5% |
0.0% |
-0.9% |
-0.7% |
0.3% |
-0.4% |
-0.9% |
-0.4% |
|
Q2 2024 |
||||||||
|
Annual growth |
-3.1% |
-1.5% |
-3.6% |
-3.7% |
-2.0% |
-0.8% |
-2.9% |
-2.7% |
Source: Savills Prime Regional Index, Q2 2024
