SUPER-PRIME RESIDENTIAL RESEARCH 2018 - Knight Frank
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RESIDENTIAL RESEARCH
SUPER-PRIME INSIGHT
2018
SUPER-PRIME INSIGHT 2018 RESIDENTIAL RESEARCH
SUPER-PRIME MARKET INSIGHT
Welcome to the latest edition of the Knight Frank Super-Prime Insight. In this report we have assembled the
latest data covering the £10m+ residential sales market in London, highlighting where activity is taking place,
as well as how the market is performing with less than a year to go until Brexit.
Activity levels in the super-prime (£10 million-
FIGURE 1
plus) London market have stabilised compared Super-prime map of London Total value of £10 million-plus sales by neighbourhood
to recent years.
Trading volumes have been underpinned in
many cases by the release of pent-up demand,
which formed following a series of tax changes Up to £20m £20m to £75m £75m to £150m £150m to £250m £250m plus
to high-value residential property.
Year to March 2016 Year to March 2017 Year to March 2018
As a result, the number of new prospective
super-prime buyers registering in the first three N6
months of 2018 was 7% higher than last year.
Although the number of transactions in the
year to March was 9% lower than a figure of
126 recorded over the previous 12 months, this Hampstead
Heath
is an improvement compared to annual falls
of more than 20% registered throughout 2016 NW3
and the first half of 2017.
This stabilisation follows a period of inaction
that for some buyers stretches back several
years. Anecdotal evidence suggests those
with a stronger incentive to buy, in many cases
related to family or educational requirements
and those coming out of rental properties, are
NW8 NW1
now doing so in greater numbers.
This has been facilitated by asking price Regent’s
reductions as vendors price in higher rates of W9 Park
stamp duty. The average discount between the
asking and the achieved price for super-prime
properties in the first quarter of 2018 was 10%.
This compared to 6% in 2016 and 4% in the W1
W2
same period in 2015. W11 WC1
The steepest price decline since the peak of
the market in prime central London in August
2015 has been in Chelsea (SW3 and SW10), W8 Hyde Park
where a 15.5% fall took place between then
SE1
and March 2018. Buyers have responded to S
SW7 SW1
the decline and the value of super-prime sales W14
has risen as a result, as Figure 1 shows.
SW5
SW3
The effects of a weaker pound also continue
to drive trading volumes, alongside the
SW10
continued appeal of London. For example,
buyers denominated in US dollars would have
benefitted from an effective discount of 11%
Battersea
at the end of March compared to the period SW6
Park
before the EU referendum, as figure 2 shows.
Despite the currency effect and the fact higher
SW11
stamp duty has in many cases been priced
in, we do not anticipate a material increase in
sales volumes or pricing in the short-term due
to political uncertainty surrounding Brexit and
the domestic UK political landscape.
Source: Knight Frank Research
2
SUPER-PRIME INSIGHT 2018 RESIDENTIAL RESEARCH
2018 OUTLOOK
AGENT PERSPECTIVE
We have spoken to a range of Knight Frank’s agents in the super-prime market to obtain
their perspective on some of the key trends and what the remainder of 2018 may bring.
Global factors Buyer demand is rising but remains Growing demand among British
The London market has faced considerable price-sensitive buyers for family houses
economic and political challenges, many of There has been been a definite uptick in Family houses in the Royal Borough of
which remain in place. enquiries from prospective buyers, which is Kensington and Chelsea are in relatively strong
feeding through into sales. However, some demand at the start of 2018 among needs-
“Though London has had a tough time buyers remain hesitant. driven buyers.
recently, it is seeing renewed vigour. The
effective discount provided by a weaker “Those buyers making commitments have “While international investors are
pound has certainly helped some buyers either been in the market for a while or have proceeding with more caution, British
seeking value. There is a continued focus a pressing social or personal need to move. families committed to London are more
on safe haven investments for the long So there is a ticking clock for many of them comfortable buying given that pricing has
term with increasing focus on income which, together with the price declines and largely adjusted for stamp duty. It means
generation and longer-term returns. favourable currency movement, means areas like Notting Hill have done very well at
Although political risk remains with us, they are now deciding to act. Buyers are the start of 2018.”
economic fundamentals underpinning the less location-specific and new focal points
market remain strong, with interest rates at include Fitzrovia and W2.” Thomas van Straubenzee,
an all-time low and global economic growth Head of Private Office
improving.” Daniel Daggers, Prime Central London Team
Although political risk remains with us, economic
“
Paddy Dring, International Residential
and Super-Prime fundamentals underpinning the market remain strong.
New-build supply is slowing As demand changes so do Russian demand is stable
The supply of new-build super-prime requirements Russian buyers have experienced economic
properties in London has slowed in recent The London super-prime buyer base is and political uncertainty in recent years but the
years. As such, buyers should factor a extremely diverse, with British, European, appeal of London remains.
diminishing supply pipeline into their decision- Middle Eastern, North American and more
making process. recently Chinese buyers seeking property “The reality is that London never lost its
as both homes and investments. While the reputation as a target market for Russian
“Buyers are increasingly looking for range of nationalities active in the market has buyers, but economic conditions in Russia
completed or near-completed schemes, remained as wide as ever, there has been a over the past three to four years have
which means supply is becoming more definite shift in the source of wealth away from reduced demand to some extent. Political
limited for super-prime new-build schemes. the financial sector and towards more tech and uncertainty remains a fact of life but the
For those looking, it means sitting and entrepreneurial sources: relative strength of the ruble against the
waiting may not be the best policy.” pound over the last couple of years has
“As the source of wealth shifts, so do the supported demand.”
Ian Pidgeon, Prime Central London desired locations for purchases. As younger
Developments buyers from new wealth sectors appear in Katya Zenkovich, Knight Frank Russia Desk
the market, we are being asked to provide
properties further east into Fitzrovia, mid
town and towards the city.”
Charles Penny, Prime Central London Team
3SUPER-PRIME INSIGHT 2018 RESIDENTIAL RESEARCH
2018 OUTLOOK
AGENT PERSPECTIVE
New-build property will continue to Buyers are very astute and are More comparable pricing evidence
shape the market scrutinizing the market for value will drive liquidity
The growth of the super-prime development Higher levels of stamp duty are increasingly Vendor expectations will rebase as more sales
pipeline over recent years is set to continue. factored into pricing. However, political take place at realistic prices
uncertainty in the UK means some are still
“The future growth in the London market cautious. “Clarity on pricing in the super-prime
will be product-led, through prime new- market is a constant challenge but a
build developments. These schemes fulfil “More super-prime buyers have come to growing number of vendors have realised
the aspirations of what are typically newer terms with stamp duty but because some that they won’t get yesterday’s prices. As
and younger buyers who want a fusion have been looking for more than a year, more comparable evidence feeds through
between a design-led hotel and a residential they have become very knowledgeable and into the market from motivated vendors,
property. Demand for the best single-unit know where prices should be. However, it is giving buyers confidence to transact.
developments in period properties still the UK political situation, including Brexit, This, in turn, will drive liquidity.”
exists but the wider focus remains on those means there is still a mood of relative
schemes that provide a high-quality of caution in the market.” Rory Penn, Head of Private Office
amenity, privacy and service.”
Noel Flint, London Residential
Rupert des Forges, Prime Central London
Developments
Some buyers prefer the periphery of Political instability in the UK is a Don’t overlook traditional demand
London relative concept drivers
While London has a host of obvious While Brexit and political uncertainty in the Traditional drivers of demand have come to
attractions, family concerns can mean that UK is dampening demand to some degree, the fore as political and economic uncertainty
buyers are drawn to properties within 45 events in other parts of the world put this into have risen.
minutes of the capital. perspective.
“It is a cliché but education and culture still
“The obvious advantage of being just “Despite everything that is going on in the play a massively important role for super
outside London is that you have access UK, money is still coming in. The safe haven prime buyers in London. With everything
to some of the best polo, golf and country effect is alive and well. When you look at else going on, it’s easy to forget that people
clubs in the world while you are still less some of the instability and conflict in other still want to study here, go to Wimbledon
than an hour from London. Education parts of the world it makes you realise and Ascot and love the social scene. There
is also a major driver and many buyers the UK’s problems are relatively small by is also a strong creative aspect to living
simply want to bring their children up in the comparison. Capital controls are often the in London, demonstrated by some of the
country. The key area is to the the west and only reason more money doesn’t come in.” recent deals by tech companies.”
south-west of London, which benefits from
good infrastructure, airfields and a feeling Alasdair Pritchard, International Residential Sami Robertson, Kensington Office Head
of security.” and Global Wealth Ambassador
Stuart Cole, Country Department
Demand for the best single-unit developments in period properties still exists
“ but the wider focus remains on those schemes that provide a high-quality of
amenity, privacy and service.
4SUPER-PRIME INSIGHT 2018 RESIDENTIAL RESEARCH
FIGURE 2
The currency effect How far the effective cost of a £10 million property fell between 22 June 2016 (pre-EU referendum) and 31 March 2018
Pricing discount (£10m+) Currency movement versus sterling Total effective discount Source: Knight Frank Research
0%
-6.6% -6.6% -6.6% -6.6% -6.6% -6.6% -6.6% -6.6% -6.6% -6.6% -6.6% -6.6%
-5%
-23% -15% -12.5% -8.8% -8.4% -7.8% -6.9% -6.6% -5% -4.4% -3.8% -3.3%
-10%
-11.6% -11% -10.4% -9.9%
-13.4% -13.1%
-15% -14.3%
-15% -15.4%
-19%
-20%
-21.6%
-25%
-29.5%
-30%
RUB ZAR EUR AUD INR CAD USD HKD CNY SGD MYR TRY
FIGURE 3
The location of super prime sales
£10 million-plus sales by area
30%
25% Year to
20% March 2016
15% Year to
March 2017
10%
Year to
5%
March 2018
0%
Kensington
Knightsbridge
Mayfair
Chelsea
Belgravia
St John's Wood
Notting Hill
Marylebone
Hampstead
Others
Source: Knight Frank Research
FIGURE 4 FIGURE 5
Value of super prime sales by price band Volume of super prime sales by price band
£10-15m £15-20m £20-25m £25-30m £30m+ £10-15m £15-20m £20-25m £25-30m £30m+
100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
Year to Year to Year to Year to Year to Year to
March 2016 March 2017 March 2018 March 2016 March 2017 March 2018
Source: Knight Frank Research Source: Knight Frank Research
5SUPER-PRIME INSIGHT 2018 RESIDENTIAL RESEARCH
FIGURE 6 SUPER-PRIME SALES RESIDENTIAL RESEARCH
Pricing in the super-prime market bottoms out in
prime central London Paddy Dring Tom Bill
Head of International Sales Head of London Residential
Pricing above Over £10m £1m to £2m and Super Prime Research
£10million has +44 20 7861 1061 +44 20 7861 1492
strengthened 4% paddy.dring@knightfrank.com tom.bill@knightfrank.com
versus lower-value
price brackets. 2%
After initially slowing 0% Daniel Daggers Claire Williams
to a greater degree -2% Super Prime London Sales Senior Research Analyst
following stamp duty +44 20 7861 1758 +44 20 3897 0036
increases, pricing -4% claire.williams@knightfrank.com
daniel.daggers@knightfrank.com
has bottomed out -6%
in response to -8%
stamp duty-related Charles Penny
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
adjustments. Super Prime London Sales
+44 20 7861 5345
charles.penny@knightfrank.com
Source: Knight Frank Research Ian Pidgeon
Prime New Homes
+44 20 7861 1302
ian.pidgeon@knightfrank.com
FIGURE 7
A rising number of wealthy individuals in the UK
The percentage US$5M+ Individuals US$500M+ Individuals
change in the Important Notice
number of wealthy © Knight Frank LLP 2018 - This report is published for
individuals in the general information only and not to be relied upon in any way.
UK between 2017 Although high standards have been used in the preparation
and 2022 of the information, analysis, views and projections presented
in this report, no responsibility or liability whatsoever can
be accepted by Knight Frank LLP for any loss or damage
17% 16% 18% resultant from any use of, reliance on or reference to the
contents of this document. As a general report, this material
does not necessarily represent the view of Knight Frank LLP
in relation to particular properties or projects. Reproduction
of this report in whole or in part is not allowed without prior
written approval of Knight Frank LLP to the form and content
within which it appears. Knight Frank LLP is a limited liability
partnership registered in England with registered number
OC305934. Our registered office is 55 Baker Street, London,
US$50M+ Individuals W1U 8AN, where you may look at a list of members’ names.
Source: Knight Frank Research
REPORTS
RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH PRIME LONDON PRIME LONDON
SALES INDEX LETTINGS INDEX
SUPER PRIME LETTINGS INSIGHT SUMMER 2017
Super prime lettings demand remains strong but securing the right
Recent super prime lets BELGRAVIA SALES MARKET INSIGHT 2017
This report analyses the performance of single-unit rental properties in the second-hand prime central London market between
property in central areas can be a challenge, as Tom Smith tells Tom Bill
APRIL 2018 The prime London sales indexes are based on repeat valuations of second-hand stock and do not
include new-build property, although units from completed developments are included over time.
APRIL 2018 £250 and £5,000-plus per week. For an analysis of the build-to-rent market and the institutional private rented sector in London
and the rest of the UK, please see our Private Rented Sector Update report http://www.knightfrank.co.uk/research FIGURE 1
Property prices in Belgravia
Activity in the London super-prime (£5,000 per “A wider mood of uncertainty has picked up PRIME CENTRAL LONDON
PRIME CENTRAL LONDON Achieved price, two years to September 2017
week-plus) lettings market has continued to following the snap general election and the start
LONDON
strengthen at the start of 2017. There were 42 of Brexit talks,” said Tom Smith, Knight Frank’s Prime central London index | 163.2 Annual rental value change | -0.8% Quarterly rental value change | -0.2%
super prime tenancies agreed in the first four head of super prime lettings. “At this price Prime central London index | 5,892.0 Annual change | -1.2% Quarterly change | -2.4% Monthly change | -0.3% FIGURE 2
months of the year, up from a figure of 33 in point, there are tenants who are able to rent in Belgravia fact sheet
the same period in 2016, LonRes data shows. the short-term and buy when they sense that a Eaton Square, Belgravia, £20,000/week
FIGURE 1 FIGURE 2
RESIDENTIAL
Figure 1 While demand remains robust for n nt
Buckingham Population: 6,892
In the year to April, there were 122 tenancies greater degree of stability has returned.” Figure 1 The number of transactions in the FIGURE 1 FIGURE 2 New rental property supply declines in PCL Rental value declines bottom out in PCL lto
WCres
Wi
ce
es Palace
Transactions rise and prices bottom out £5m-£10m sees biggest growth in sales volumes rental properties, levels of new supply have Cr
agreed, which was one fewer than the previous “One reason the number of tenancies agreed year to March 2018 rose 6% compared to declined as more certainty returns to the
% change, annualised % movement in rental values et
Annual growth and annualised % change in sales % change, year to March 2018 versus year e
avve tree
Str
12-month period. the previous 12-month period. Activity has AVERAGE £PSF
is not higher is due to limited stock availability,” volumes to March 2017 sales market and more landlords explore a New prospective tenants Viewings
Annual change Quarterly change lgr re ter
New listings Be ua
B es Year to September 2017 £2,110
risen and price declines have bottomed
REVIEW
added Tom, who said Knight Frank had agreed sale due to recent tax changes, including Sq Ch
Demand at this price point remains resilient due PCL annual price change Year to September 2016 £2,310
four tenancies above £20,000 per week between out as the market adapts to higher rates of % change in transactions (annualised)
12%
changes to mortgage interest relief and wear 30% 1%
to the impact of higher rates of stamp duty and stamp duty.
25% Year to September 2015 £2,395
February and June. “It is less of an issue for 10% 2% 10% and tear allowances. 20%
0%
uncertainty over the short-term prospects for 15% -1% MAXIMUM £PSF
tenants wanting a family house in, say, north 5% 1%
8%
price growth in the sales market. Tax changes 10% Year to September 2017 £5,445
re
0% -2%
Figure 2 When sales volumes are split by 0% Figure 2 Easing supply and robust demand
ua
London but large lateral space in prime central -1% 5% London Victoria
re
Sq
in recent years included a stamp duty hike 6% -3% Year to September 2016 £5,180
ua
price band, the biggest increase in the year -5% 0%
Upper Grosvenor Street, Mayfair, £27,500/week -2% has put upwards pressure on rental values,
ton
London is at somewhat of a premium.”
et
eet
SPRING 2018
Sq
-5% Year to September 2015 £4,585
for £1 million-plus properties in December
Ea
-10% -3% -4%
Str
4%
ter
er
to March 2018 was between £5 million and which means they are heading towards
e
S
-10%
est
-15% -4% Source: Knight Frank Research / LonRes
ry
Flats represented 36% of the overall super prime
Chhe
-5%
2014, though this cost is increasingly reflected £10 million, suggesting stamp duty hikes -15%
Ebu
-5% 2% positive territory. The last time positive
Eb
-20% -20% -6%
in asking prices, which has stabilised sales lettings market in the year to April 2017, which have become more absorbed by the market -25%
-6%
annual rental value growth was recorded Eli
Eliz
lizab BLUE PLAQUES
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
-7% 0%
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
was down from 41% in the preceding year. eth
volumes. Super Prime Lettings Team at this price point. -30% -8% was in January 2016. Stre
£1m-£2m
£2m-£5m
£5m-£10m
£10m+
reet
et Ian Fleming, author
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
Indeed, across the whole market landlords can The Knight Frank Super Prime Lettings team
In the two years following the December 2014 Sloane Square E y
bury
Ebury
Felix Mendelssohn, composer
provides a bespoke service to clients with property Source: Knight Frank Research Source: Knight Frank Research
stamp duty rise, there were 231 super-prime achieve notable premiums if they are able to Squa
Square Wolfgang Amadeus Mozart, composer
interests of £5,000-plus per week in prime central Source: Knight Frank Research / LonRes Source: Knight Frank Research / LonRes Vivien Leigh, actress
lettings deals, which represented a 9.5% respond to high levels of demand by revamping
existing stock to the right standard, said Knight London. Led by Tom Smith, the team consists of PRIME OUTER LONDON Mary Shelley, author
increase on the preceding two-year period. Pimlico
Frank regional partner David Mumby. “If a 12 local specialists with over 130 years of collective PRIME OUTER LONDON l Sub-£1,000,000
Thomas Cubitt, master builder
Lord Alfred Tennyson, poet
In a sign of strengthening demand in the highest experience and has a dominant market share in
landlord is able to reconfigure their existing Prime outer London index | 170.6 Annual rental value change | -3.3% Quarterly rental value change | -0.06% l £1,000,000 to £2,500,000
price brackets, there were 30 tenancies agreed London. In the year to March 2017, it completed
space and fit-out the property to the right kind Prime outer London index | 281.0 Annual change | -3.1% Quarterly change | -1.1% Monthly change | -0.1% l £2,500,000 to £5,000,000 STOCK BY PROPERTY TYPE
above £10,000 per week in year to March 2017, of high specification, it can be the difference more than twice as many super prime lettings as its
l £5,000,000 to £10,000,000
two nearest competitors combined, LonRes data
which compares to 20 in the previous year. between £3,000 and £6,000 per week,” he said. FIGURE 3 FIGURE 4 l £10,000,000-plus Source: Knight Frank Research / LonRes / Land Registry
shows. The team members are based in Belgravia, Figure 3 Some areas in prime outer London Flat 75%
FIGURE 3 FIGURE 4 Rental value movements in POL Supply and demand in prime outer London
Belsize Park, Chelsea, Hampstead, Hyde Park, Figure 3 There were more offices in prime have experienced rental value growth in
FIGURE 1 Price rises versus declines Average sale times rise recent months following a period where all
Monthly % of Knight Frank offices reporting rise or fall Year to March 2108 versus year to March 2017 Prime central London market update Stuart Bailey, Belgravia Office Head
Kensington, Knightsbridge, Marylebone, Mayfair, outer London reporting an annual price
Super prime lettings volumes and rental values Monthly % of areas reporting rises or declines Year to March 2018 versus year to March 2017
areas were reporting declines. Areas reporting annual rental value rises There has been a steady recovery in “Belgravia is underpinned by its quality of House 25%
Notting Hill, South Kensington and St John’s Wood. decline than a price rise in March. Buyer 35%
Areas reporting annual price rises Areas reporting annual rental value declines transaction volumes in prime central London housing stock which continues to drive
Total Transactions Average rent Maximum rent Knight Frank’s global real estate network gives the caution around stamp duty remains a factor, Areas reporting annual price declines 35% 30%
as does political uncertainty. Figure 4 In similar fashion to prime central 100% in 2017 as asking price reductions stimulate demand. Whilst all markets remain price
team access to London’s most exclusive properties 30% 80% 25%
£45,000 £45,000
50
on and off the market. 100%
London, rental value growth has returned as 60% demand, a trend illustrated in figure 4. sensitive, the increase in maximum pricing AGE OF HOUSING STOCK
£35,000 25% 20%
£22,500
£28,000 £18,500
Figure 4 Higher rates of stamp duty appear
80% levels of supply have begun to recede. The 40% However, the process has not taken place denotes the relative immunity for the very
40 £20,000 £20,000 60% 20% 20% 15%
£15,000 £30,000
not to be fully reflected in asking prices yet. 40%
number of new listings in the year to March 0% in a uniform way across all markets and best quality. Price-sensitive buyers are Pre-1900 57%
15% 10%
30 £16,800
£13,500
20% 2018 was 6% higher than the previous 12 -20%
buyer sensitivity to price remains high. Two heavily scrutinising the characteristics to
£12,500 The average number of days a property was 0% 10% -40% 5% 1900-1939 10%
months. The equivalent increase in March noteworthy figures underline the enduring ensure they are not overpaying. Accordingly,
20 £10,000 Tom Smith on the market was 22% higher in the year -20% -60%
-40% 5% 2017 was 51% as more owners decided to -80% 0%
Head of Super Prime to March 2018 compared to the previous -100%
SDLT reform nature of demand in Belgravia. First, there pragmatic sellers are reflecting on their 1945-1972 17%
Viewings
New
prospective
tenants
Tenancies
Agreed
New
lettings
listings
10 £8,000 -60% 0% list their property for rent in response to an
Lettings 12-month period, suggesting reluctance -80% has been a 19% rise in the maximum price asking prices and are setting levels which
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
SDLT reform
Exchanges
Stock
Under Offer
Viewings
Days On
Market
£6,000 -100% uncertain sales market.
0 tom.smith@knightfrank.com on the part of buyers to meet some asking per square foot over the last two years (figure reflect the true value as opposed to historic 1973-1999 7%
Mar-15
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
+44 20 7881 7730 prices. Source: Knight Frank Research Source: Knight Frank Research 2). Second, the average sale price in the first hope. While this is a relatively binary test, it
2000-present 9%
nine months of 2017 was 8% higher than the has never been more relevant. At the right
Source: Knight Frank Research Source: Knight Frank Research Source: Knight Frank Research / Valuation Office Agency
bull market conditions of 2014 (figure 5). price there is a trading market.”
A FRAGMENTED RECOVERY IN Source: Knight Frank Research / LonRes
RENTAL VALUES STRENGTHEN RISING RATES AND BREXIT
THE SALES MARKET
Wealth Report 2018 London Review London Super Prime Prime Central London Prime Central London Belgravia Market Insight
Spring 2018 Lettings Sales Index April 2018 Lettings Index April 2018
RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH
PRIME COUNTRY
HOUSE INDEX
PRICES FLAT BUT ACTIVITY
RISES IN Q2
HAMPSTEAD SALES MARKET INSIGHT 2017
There was little movement in terms of price growth for prime country
SOUTH KENSINGTON SALES MARKET INSIGHT 2017 homes during the second quarter, but activity levels were robust
SUPER PRIME HOME COUNTIES LETTINGS SUMMER 2017
compared with the same period in 2016.
KENSINGTON SALES MARKET INSIGHT 2018 FIGURE 1
Property prices
FIGURE 1
Property prices in Hampstead and surrounding area
Key headlines from Prime country prices were largely
unchanged between April and June 2017,
A pick-up in sales volumes in the past few
months also suggests that prime markets Recent Super Prime lets
Achieved prices, 12 months to June 2017, excludes new-build Achieved prices, 12 months to February 2017 Q2 2017 rising by just 0.1%. outside of London are weathering much of
Demand for Super Prime rental property across the Home Counties has been
the political and economic uncertainty as a
strong so far in 2017, but stock levels at the top end of the market have fallen.
FIGURE 1 Prime country prices rose by 0.1% On an annual basis, property values
FIGURE 2 Average sold price and sales volumes by area
Property prices in Kensington n Sub £1,000,000
between April and June result of the General Election, as well as the
were 0.2% higher on average, slightly The prime rental market in the Home Counties However, against a backdrop of falling supply,
Achieved price, year to December 2017 n £1,000,000 to £1,499,999 Royal Albert hall ongoing discussions surrounding Brexit.
Queen's
Variations in average sold prices between time periods do not necessarily indicate price growth
n £1,500,000 to £1,999,999 improved from the 0.1% fall reported in tend to be very cyclical, often picking up when leading indicators of demand remain strong.
n £2,000,000 to £2,999,999 £1,750,000 On an annual basis, property values the year to March. The figures do, however, also reveal some the sales market slows and vice-versa. This is
Gate
l Up to £1m
FIGURE 2 wider trends. Properties that are located Knight Frank figures show a 13% increase in
n £3,000,000-plus were 0.2% higher especially the case in the Super Prime market,
l £1m to £2.5m Kensington fact sheet £1,500,000 But while values have been largely static close to good schools and transport links prospective tenants registering with a budget of
covering rentals of at least £15,000 per calendar
Average sold price
l £2.5m to £5m Imperial College over this time, an analysis of Knight Frank remained the most in demand over the at least £15,000 pcm in the six months to May
£1,250,000 month. Regents Walk, Ascot
l £5m to £10m Population: 32,098 London
Prime properties in town and city housing market data points to a more course of the quarter, particularly in town compared with the previous six month period,
l £10m+ active market, albeit one that remains price Changes to stamp duty back in late 2014, for for example. The volume of viewings conducted
£1,000,000 markets continued to outperform, and city markets which outperformed their
example, which increased purchase costs at the
NEW YORK
AVERAGE £PSF sensitive following changes to property above this level by Knight Frank offices has also
Natural History
£750,000
rising by 1% in Q2 and by 1.5% annually more rural counterparts. top end of the market, pushed demand and then
SW7 5 Museum more than doubled over the same time.
Kens
Year to December 2017 £1,585 taxation in 2014 and 2016.
Year to December 2016 £1,655 This was supported by a 1% increase in stock into the rental sector as buyers became
ingto
Kensington £500,000
Agents report that against this backdrop increasingly price sensitive and potential vendors Jemma Scott, Partner in Knight Frank
SUPER-PRIME REVIEW
Year to December 2015 £1,710
Palace Road Knight Frank forecasts are for a 1.5% values for prime town houses between April
Cromwell
moved their properties into the rental market. Home Counties, said: “Increasingly, tenants
n Palac
N6 4 N6 6 NW3 1 NW3 2 NW3 5 NW3 6 NW3 7 NW6 3 it is vendors who are realistic about
Cam
Hyde Park
MAXIMUM £PSF increase in prime prices in 2017 and June. In comparison, homes located
Holl
are renting in order to ‘try before they
Year to December 2017 £5,200 pricing, or willing to negotiate, that are
pde
Holland Park
Gloucester Road
South in more rural locations fell in value by 0.2% However, the sales market started brightly in
and
buy’, illustrated by an increase in tenancy
e Gard
SW7 4
Year to December 2016 £6,545 Year to January 2016
e
n Hill
Kensington achieving sales.
Key: Number of sales 40 140 over this period. On an annual basis, prices 2017, with Knight Frank figures showing a 33%
p's Avenu
Year to January 2017
n Road
agreements that include an option to 2017
Villa
Year to December 2015 £5,790 St George’s Hill, Weybridge
were 1.5% and 0.4% higher respectively. pick-up in the number of £5 million-plus sales
Roa
ens
ad Knight Frank figures show prime sales purchase. This allows families to settle in the
s Roa
Source: Knight Frank Research / LonRes
SW5 0 N6 4 Source: Knight Frank Research / Land Registry
completed across the country in the first six
ingto
Ro
d
n
Bisho
eet area before committing to a full time move.”
h Str pto Highgate
volumes rose by more than half between As we have noted in previous updates, months of 2017 compared with the same period Super Prime Lettings Team
d
Wilm
BLUE PLAQUES om
n Hig
Earl’s Court
Br FIGURE 3 April and May, compared to the same The Knight Frank Super Prime lettings team
The
gto a shortage of good prime housing stock last year. This imbalance between supply and demand
Ingr
John Stuart Mill, philosopher
Ken
sin
s Transaction volumes and pricing data period in 2016. The comparison flatters this continues to act as a barrier to further provides a unique service to clients and tenants
means competition for best-in-class properties
am
William Thackeray, novelist
on
Villa The short-term impact has been to tempt those with property interests upwards of £15,000 per
Ave
ngd
Rudolf Nureyev, ballet dancer year’s performance, as the 2016 data was growth in the market. If sustained, this is robust.
Abi Total Transactions Total Transactions (incomplete) Average Maximum “accidental landlords” who had switched to the
nue
Jean Sibelius, composer month across the Home Counties. Covering Ascot,
adversely impacted by the introduction of could put upwards pressure on the market
T.S. Elliot, poet rental sector back into the sales market. Rising demand at the top end of the market is Beaconsfield, Cobham, Esher, Guildford, Henley,
Sir Winston Churchill, politician N6 6
the additional rate of stamp duty, but even over the remainder of the year. Knight
NW3 7 Hampstead Heath
This is reflected by our analysis which shows a underpinned by the fact the Home Counties are Sunningdale, Virginia Water, Weybridge and the
£21.8m
£10.6m
£13.8m
£13.5m
£11.8m
£10.8m
£15.2m
£12.1m
£12.5m
£11.8m
£6.1m
£9.3m
Chelsea against the level of market activity in 2015, Frank forecasts are for a 1.5% increase
£18m
Agatha Christie, writer
Source: Knight Frank Research / LonRes 21% reduction in the number of Super Prime often the first destination for individuals moving surrounding countryside, the team has over 140
sales volumes were still higher by 29%. in prime prices in 2017.
ad ton
350 properties available to rent across the Home out of London. The presence of a number years of collaborative lettings experience. Our most
Ro ing
STOCK BY PROPERTY TYPE Fer NW3 1 Counties at the end of May compared with the of private and international schools means experienced negotiators work collaboratively and
Red
Ave ncr
FIGURE 2 Average sold price and sales volumes by area FIGURE 3 Transaction volumes and pricing data nue oft
Carl 300 same point of 2016. Stock levels were also 12% the area also appeals to international tenants seamlessly across Berkshire, Buckinghamshire,
Frognal
ingf FIGURE 1 FIGURE 2
Source: Knight Frank Research / LonRes / Land Registry Flat 76% Excludes new-build Excludes new-build ord lower than at the start of the year. looking to relocate to the UK. Oxfordshire, and Surrey offering a single point of
Roa
d
NW3 2 Price change Prime urban v rural price performance contact for access to the Home Counties most
Terraced 21% Variations in average sold prices between time periods do not necessarily indicate price growth Total Transactions Average Maximum NW3 6 250
Annual and quarterly change in prime country Indexed 100 = March 2005 exclusive properties both on and off market.
property values FIGURE 1
Prime central London update Sami Robertson, Kensington Office Head £2,250,000
Home counties lettings volumes and rental value data (£10,000+ pcm)
£6.35m
£10.9m
£7.75m
£4.95m
£9.25m
Semi-detached 2% 200
£5.5m
£5.5m
£8.5m
£4.4m
£9.8m
£5.3m
£10m
Activity in the prime central London sales “More vendors have adjusted their asking NW3 5
£6m
£7m
£2,000,000 140
Detached 1% 8% Total listings Average asking rent
market continues to stabilize, a trend price to the point that their properties are £1,750,000 100 ANNUAL % CHANGE RURAL
Average sold price
150
URBAN
that is more marked in higher-value gaining growing interest from buyers who AGE OF HOUSING STOCK
NW6 3 £1,200,000 QUARTERLY % CHANGE
£1,500,000 6% 130 150
price brackets. While the overall number are heavily scrutinising the market for value. 80 Contains OS data © Crown Copyright and database right 2017
of transactions rose 5% in the last six Kensington has also benefited from some Pre-1900 68%
£1,250,000
60
100
OLIVER KNIGHT 120
£1,000,000 £1,000,000 Associate 4%
months of 2017 compared to 2016, the high-quality new-build schemes, which have 120 90
50
1900-1939 9% £2,000,000
increase was 14% for properties valued helped reposition the area as more current £750,000 40
“While values have been 2% 60 £20,000
Jemma Scott
at between £5 million and £10 million, in the minds of buyers. However, education 1945-1972 7% £500,000 £1,500,000 0 110
LonRes data shows. In Kensington, this
Contains OS data © Crown Copyright and database right 2017
still plays a key role. One house near a very SW5 0 SW7 4 SW7 5
20
n Sub £500,000 £800,000
largely static over this time, 30 £15,000 Partner, Home Counties
0%
n £500,000 to £1,000,000 an analysis of Knight Frank
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
0 £1,000,000 jemma.scott@knightfrank.com
trend is highlighted by the more resilient good school exchanged on the day of the 1973-1999 9%
100 0 £10,000
n £1,000,000 to £1,500,000
housing market data points
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
Q2-2017
sales volumes in the typically higher-value general election in 2017. The buyer did not +44 20 7881 7730
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
7%
Year to March 2016 -2%
2000-present Key: Number of sales 60 150 n £1,500,000 - £3,000,000
postcodes to the north of Kensington High want to wait for the result, the school was Year to March 2017
to a more active market.”
Source: Knight Frank Research / Valuation Office Agency Source: Knight Frank Research / Land Registry n £3,000,000-plus 90
Street, as figure 4 shows. more important.” -4%
Source: Knight Frank Research / Land Registry Source: Knight Frank Research / LonRes Source: Knight Frank Research / Land Registry
Contains OS data © Crown Copyright and database right 2017 Follow Oliver at @oliverknightkf
Source: Knight Frank Research
-6% 80
For the latest news, views and analysis
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on the world of prime property, visit
Kensington Market Insight
Global Briefing or @kfglobalbrief
South Kensington Market Hampstead Market Insight Prime Country House Index Home Counties Super New York Super Prime
Source: Knight Frank Research Source: Knight Frank Research
Insight Prime Lettings Review 2017
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