February 2015 was a better month for the prime property market in London as prices in several markets rose for the first time in five months. These areas included Islington, the City and Fringe area and Riverside, which showed 1.3%, 1% and 0.4% rises. Properties in some areas did lose value, including traditional prime markets like Chelsea and South Kensington. In a wider sense the market showed growth of 0.1%.
The reason properties in typical prime areas are losing value is because of the continued threat of a mansion tax. There are more homes valued at over £2 million in these areas than anywhere else in the city with a whopping 46% in just two boroughs (Westminster and Kensington and Chelsea). The potential of new taxes has harmed the confidence of buyers and is leading to cooling in the market, particularly in these locations.
The areas that are showing growth are in non-traditional prime locations because properties there are slightly cheaper and there is more demand. Growth has come largely in homes valued between £1 million and £2 million as these fall beneath the threshold of where the prospective tax would be introduced.
The prime market is getting slightly more challenging and many experts have referred to it as having two speeds, i.e. a growing market between certain values but a shrinking one over a certain threshold. This can be illustrated with February’s growth results. Properties valued between £5 and £10 million declined 0.1% in the month, continuing the cooling from last year. The £1 – £2 million market on the other hand saw prices grow by 0.4% in the same period.
If you are looking for investment properties in London you may find yourself targeting the lower prime market rather than the higher one. It is also likely you’ll find that you are searching outside of established boroughs with more focus on growth areas. You should call on experienced property experts to help you find the right investments, even if it does mean looking further afield than you would have liked. We specialise in helping investors choose the right properties, as well as providing full property and block management in Croydon and throughout the whole of London. We can help you to not only find the right investment, but also to manage it effectively and professionally.