House prices in central London have increased for the first time since 2015.
Following three quarters of stagnation, prices have risen by 0.5% during the first quarter of this year, according to Cluttons’ London Residential Property Market Outlook for summer 2017.
The report shows growth across the board in key submarkets, including South Kensington (2.1%), Knightsbridge (1.3%) and Chelsea (1%).
Cluttons’ head of research, Faisal Durrani, said: “With average prices hovering at a little over £1m, homes beyond the prime boundary are almost two-thirds cheaper on average than properties in prime central London locations.”
This substantial price delta, he added, is largely responsible for the buoyancy of submarkets in Zone 2 and beyond.
The figures reflect a slowing of the quarterly rate of decline of values in prime central London, with Q4 2016 and Q1 2017 registering an average decrease of 0.4%, following sharper falls in the first half of last year.
The report also shows growth in the prime central rental market during Q1, with average rents rising by 0.2% – the first positive increase in more than a year. Average weekly rents in prime central London inched up to £1,411, from £1,406 at the end of last year.
Durrani said, “The decline in rental values over the past few quarters, has translated into a revival in enquiries for homes in the two- to five-bedroom bracket as existing rates appear to have fallen to what are now perceived to be acceptable levels, which has tempted tenants to seek out better value accommodation.
Cluttons forecasts a cumulative growth of 9.2% in prime Central London rental values over the next five years, while capital values are expected to increase by 8.6% over the same period.
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