House price growth cools in Prime Central London

House price growth in Prime Central London now stands at 5.7%, down from 8.8% in the first quarter of this year, according to figures from Savills.

Growth in the South West area which includes Barnes, Fulham, Putney, Richmond and Wandsworth, outperformed Prime Central London in the quarter, which reflects equity filtering out of more central areas. Quarterly growth in this area increased to 8.1% putting annual growth to the end of June at 31%.

“Historically this South West area has been popular with those priced out of areas including Mayfair, Knightsbridge and Belgravia and as a result the peak in house price growth in these areas would be expected to take place a little later,” according to Lucian Cook, Director at Savills Residential Research. “This is consistent with the ripple effect of previous peaks in growth rates in Central London.”

The fall in growth rates in Prime Central London does not mean the house price boom has ended in these areas adds Cook, “Whilst the number of new applicants per property has reduced since February, the figure remains high in a historical context and there remains sufficient pent up demand to continue to drive further growth, irrespective of an easing in the supply / demand imbalance.”

As a result we continue to believe that the second half of the year will see growth levels above and beyond the mainstream market. Whilst growth is set to be lower in the second half of the year, there remains the prospect of a small uplift over and above our 20% forecast for Prime Central London.