Prime property price falls ease slightly: Savills – Mortgage Strategy

The pace of house price falls across prime property markets eased in the third quarter as buyers and sellers became more aligned on value, according to Savills.

Prime central London values fell by 1.5% during the quarter, compared with a 1.7% decline in the second quarter, leaving prices 4.8% lower than a year earlier.

Values remain 27% below their 2014 peak, which Savills says represents the strongest relative value on record for prime central London.

Outer prime London prices fell by 1.1% in the quarter and by 3% annually, while prime regional values dropped 1.5% over the quarter and 4.1% year on year.

Country house prices declined by 1.4% in the third quarter, compared with a 2.8% fall in Q2, and were 5% lower than a year earlier.

Savills says more realistic pricing from sellers is helping to support activity, with agreed sales above £1m and £2m reaching 94% of last year’s levels in the third quarter, according to TwentyCi data.

However, buyers are becoming more sensitive to higher price thresholds ahead of the introduction of the High Value Council Tax Surcharge.

Across outer prime London, houses valued at £2m or more fell by 2.5% over the year, compared with a 1.3% decline for homes worth less than £1m.

A similar pattern was evident across prime regional markets, where properties above £2m fell by 5.5% annually, compared with a 2.9% decline among homes valued below £1m.

Regional performance also varied considerably.

Markets further from London, including the Midlands, North of England, Scotland and Wales, proved more resilient, with quarterly price falls of less than 1%.

By contrast, values across London’s commuter belt and the wider South of England declined by around 2%, which Savills linked to fewer buyers moving out of the capital to upsize or relocate.

The firm says softer prices may also create opportunities for buyers looking to trade up, as the price gap between different types of property narrows.

Country house values were 5% lower than a year earlier, although Savills says some markets, including the Cotswolds and Surrey, continued to outperform.

Savills director of research Frances McDonald says: “Prices in prime central London have also continued to adjust, but with concerns around the upcoming Budget far less pronounced than they were at this time last year, activity has continued at a steady pace, supported by cash buyers, and those who are less exposed to higher borrowing costs.

“More competitive pricing means some of the capital’s most sought after prime central locations are becoming more accessible to a wider pool of buyers.”

She adds: “The market has become increasingly sensitive to price thresholds, with £2 million now representing an important psychological as well as financial dividing line for buyers.

“Even so, the market continues to function, supported by needs-based buyers who are realistic on price.

“But a sustained return to price growth is likely to require greater certainty.”