The improved buyer sentiment that caused prime central London property prices to rise by 4.3% in the last three months is beginning to ripple out to prime markets in the rest of the country, according to latest data from Savills Research.
After eighteen months of steep falls, which have wiped a fifth of the value off country house and prime regional residential property, the Savills quarterly index shows that, as an average, values have stabilised across the country. The markets either most closely connected to London, or with the most constrained levels of stock, have shown low levels of price growth.
In line with expectations, values in the South East region have risen, up 1.8% in the quarter, headed by the commuter strongholds of Surrey and Kent. Other areas to show growth include firmly established prime areas outside of the capital’s hinterland such as Bath and Winchester.
In other areas prices either remained static or showed marginal falls in the quarter. This is a clear indication that values for the top ten per cent of property, as defined by price and quality, are beginning to bottom out in all regions as cash and equity rich buyers have seen sufficient price discounts to tempt them back into the market.
“These early stages of recovery remain highly dependent on cash buyer sentiment which remains relatively fragile”, says Lucian Cook, director of residential research at Savills. “The active buyers in the market remain highly discriminating, searching for value and quality. In contrast to boom market conditions, few are prepared to compromise and demand is therefore focused on the best properties, at the best price, in the right locations.”
Cook believes that underlying purchaser activity confirms that the prime markets are in the first stages of recovery. “But our optimism remains cautious. The economic fundamentals have not changed significantly and the desire to achieve ‘value for money’ remains a key motivator. The autumn will tease more stock out onto the market and this is likely to give a truer indication of the strength and depth of demand.
“In the past days there have been reports of rising prices in mainstream markets, both in London and beyond, in some cases ahead of the rises we have reported for prime. In both markets there has been a recognition that now is a good time to trade up, but what will differentiate the two going forward will be the number of buyers able to do so during the period as mortgage markets are being repaired.
“We stand by our forecast that the prime markets will head the recovery process as in the past. Our expectation is that the prime regional markets will bump along the bottom through the autumn. By contrast, our assessment is that significant rises in the mainstream market are rather premature and could prove to be a temporary blip.”
Paul Jarman, Head of Savills Home Counties Region, comments: “We have noticed over the past few months an increasing number of buyers returning to the market and looking to purchase in Hertfordshire. These buyers, who have been sitting on their hands for the past 18 months, are at long last being enticed back into the market. Many purchasers are North London buyers looking to gravitate out to take advantage of a better quality of life and good schools. The general perception appears to be that the market has now bottomed out. We have experienced a marked increase in activity across most price ranges, but in particular between £1 to £2 million.