High London rents spur local home buyers in 1Q2024; prime Central London flat prices jump 1.4% q-o-q

By Timothy Tay

/ EdgeProp Singapore |

May 9, 2024 5:30 AM SGT

First-time home buyers are contributing to the market growth in PCL, as the buoyant rental market encourages many tenants to seriously consider purchasing homes.

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Property prices in Prime Central London (PCL) have been on an upward trajectory since August 2023, with the rate of price increase outpacing the broader UK residential property market, according to market data by LCP Private Office, a London-based real estate group.

Citing the Halifax House Price Index, an index of UK mortgage transaction data, average UK housing prices have decreased by about GBP3,000 (about $5,090) per transaction, says Liam Monaghan, managing director of LCP Private Office.

“However, residential prices in Prime Central London have climbed over the past two quarters, indicating a promising outlook for the capital. The PCL housing market had a strong quarterly price growth of 1.4% in 1Q2024 (for central London flat prices), buoyed by a rebound in demand from local and international buyers,” says Monaghan.

He adds that first-time home buyers are contributing to the market growth in PCL, as the buoyant rental market encourages many tenants to seriously consider purchasing homes. “Rents in prime Central London are standing 40% higher than this time three years prior. Landlords can now secure a five-year fixed rate mortgage close to 5%, a significant drop from the 8/9% rates seen in 2023,” he says.

Table: LCP Private Office

He adds that over 35% of the firm’s clients so far this year are first-time buyers, and areas of particular interest for this group of buyers are Battersea, Marylebone, Islington and Canary Wharf.

Despite rising prices in PCL, Monaghan says there are still deals to be had in Central London with average flat prices standing 9.2% below their peak in 2015. “But according to our latest data analysis, this window of opportunity may start to close,” he says.

Apartments in the upscale residential area of Pimlico have recently caught the eye of property investors as the neighbourhood saw flat prices increase 2.4% y-o-y in March, compared to the same period last year.

Table: LCP Private Office

Last month, average flat prices in Pimlico were about GBP709,758, which were still about 11.6% lower than their peak in 2015. “With its close proximity to Chelsea and Kensington, Pimlico always proves popular with overseas students,” says Monaghan.

Flats in Notting Hill and Holland Park recorded the highest yearly price increase in March, jumping 3% y-o-y to reach an average of GBP960,193. But it is only 3.5% shy of its 2015 peak price.

“The PCL market will continue to see housing prices gradually climb over the coming months, as we hope for the downward movement of interest rates later this year. A lower interest rate environment will bring new optimism to the UK housing market from an international buyer’s perspective,” says Monaghan.

Table: LCP Private Office

However, he cautions that property investors will have to keep an eye on the UK government’s policy stance as the country heads to an election. “Assuming an election in the Autumn, the markets will slow to a standstill in 4Q2024, as investors await to see the result of the election before making a decision on buying or selling property,” he says.

Typically, after the uncertainty arising from the election clears, there is always a rise in buyer interest and capital values will start to rise again, says Monaghan. He adds: “This could be a result of new taxation that can often stimulate transactions.”

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