The beleaguered estate agents of Mayfair can raise a small festive cheer: house prices in London’s most exclusive districts have stopped falling for the first quarter in more than four years.
Prices in prime central London were flat in the final quarter of 2019, according to researchers at the listed property agents Savills, while prices of high-end homes across the broader area known as prime London — which includes districts further from the centre, such as Chiswick — rose slightly, by 0.1 per cent.
That helped annual price drops to slow: prime London prices fell 0.5 per cent year-on-year, down from a 3.2 per cent decline a year earlier.
Lucian Cook, head of residential research at Savills, said: “This is a stronger year-end for prime London than we had been anticipating, given the levels of political and economic uncertainty, and reflects a narrowing of buyer and seller expectations.”
Mr Cook said the apparent levelling off of prices could be a “turning point” for the falling market in what is still Europe’s most expensive city for housing. But he cautioned that Brexit concerns would continue to cast their shadow over the market despite Boris Johnson’s general election victory this month.
“2020 will not be without its challenges as the Brexit deal is negotiated, so we are not forecasting a significant bounce in values until 2021,” Mr Cook said.
The UK is currently due to leave the EU at the end of next month and to continue its current trading arrangements with the bloc until the end of 2020.
If it does not agree a trade deal by then, there is a risk of a cliff-edge “no-deal” scenario that could seriously damage the UK economy.
The Bank of England has tested the resilience of the financial system to disruptions including UK house prices falling 33 per cent in a “worst-case disorderly Brexit” scenario.
However, both buying and selling agents in wealthy areas of London reported a bounce in transactions after the Conservatives’ election victory, which removed the possibility of a Jeremy Corbyn-led Labour government. Mr Corbyn’s leftwing agenda had sparked concerns among the wealthy, who had expected tax rises.
The number of homes worth more than £5m changing hands was up by a third in December from the same month a year earlier, Savills said.
This follows four years of sluggish transactions and often steep price falls: in prime central London, which includes exclusive districts such as Chelsea and Kensington, prices have now dropped 20.5 per cent since their 2014 peak. In outer areas, the prices of high-end homes have fallen 8.4 per cent.
Prices for the most expensive homes in London have often foreshadowed the broader market. “In central London the highly discretionary super prime market has historically been the first to fall and the first to rise again,” Mr Cook added.