Alarmist reports from property portal Rightmove that the average price in London inflated by 10.2% in one month are called into question with the release of the Q3 2013 Land Registry All Transaction Data (ATD). Unlike the Rightmove statistics, which are based purely on asking prices, the ATD data tracks the actual price achieved for every sale recorded in the Government's registry.
According to these statistics, just released, property prices in Prime Central London (PCL) continue to grow around long term trend having risen by 1.64% since the previous quarter and 7.52% over this time last year (Q3 2012). Average property prices in PCL now stand at £1,484,597.
"Whilst PCL has seen robust growth over the last few years – far more than most other asset classes – short termism and sensationalist reports from commentators such as Rightmove should be treated with care. Asking price data is, in itself, misleading as it is based on hope value not actual value. And, whatever the data source, a few multimillion pound properties coming to market can distort the average price and belie true price appreciation. There is no reason to believe that prices in PCL are currently rising faster than the long term average of 9% per annum" comments Naomi Heaton, CEO of London Central Portfolio.
It is true, however, that whilst the number of people selling continues to decrease in PCL, more upward pressure will be put on prices as supply dwindles. Transactions fell to just 1,322 for the quarter, 48% below the average since published records began in 1996, and are at the lowest level since Q2 2009, the depth of the credit crunch.
Compared with this time last year (Q3 2012), sales in the core sub £2m sector of the market have shrunk 16% and the number of transactions under £1m is now less than 60% of the market.
"This reflects the fact that average prices are already well over £1m, so the lower end of the market is inevitably shrinking. It is also indicative of owners holding onto properties which are prime performers in the market's investment heartland", Heaton explains.
In contrast, the 'middle' of the market, between £2m and £5m, witnessed increased activity with transactions rising by almost 5% over Q3 2012.
Transactions have also increased by 7% at the Super Prime end of the market (over £5m) since Q3 2012, where dynamics appear to have shifted. Whilst the end of last year saw flats in London's prestigious new developments dominating top end sales, the Q3 2013 data has reflected a complete turnaround. Above £5m, 73% of PCL transactions were all houses, suggesting a return of the family home purchasers. This was further evidenced by the fact that two of the top three most expensive sales nationally took place in the traditionally domestic Boroughs of Barnet and Merton.
Whilst the most expensive sale of the quarter took place in Kensington and Chelsea, so did the cheapest transaction in PCL; a flat which sold under the 1% Stamp Duty threshold for just £66,250. This sale will baffle commentators who suggest that PCL is only affordable to the world's wealthiest elite.
The top three most expensive sales:
• £23,305,000 – Detached House on Holland Park, Kensington and Chelsea, London, W11 3TG
• £18,950,000 – Detached House on Winnington Road, Barnet, London, N2 0TX
• £17,500,000 – Detached House on Church Road, Merton, London, SW19 5AB
Cheapest sale in PCL:
• £66,250 – Flat in Pippin House, Bramley Road, Kensington and Chelsea, W10 6SZ
• £1,484,597 – up 1.64% since Q2 2013 and 7.52% over last year
• Shrunk to 1,322 for the quarter – 48% below market average since 1996
• Sub £1m – down 20.9% from Q3 2012, now less than 60% of the market
• Sub £2m – down 16% vs Q3 2012
• Between £2m – £5m – up 4.8% over Q3 2012
• Above £5m – up 7.1% vs Q3 2012 with houses comprising 73% of sales.