The glamorous neighbourhoods that make up prime central London – Belgravia, Chelsea, Kensington, Mayfair, Notting Hill and the rest – boast some of the city’s loveliest architecture as well as addresses that are renowned worldwide.
But these are not the only things that set this section of the capital apart. Prime Central London’s property market, where the players are the moneyed from Britain and all over the globe, often operates by its own set of rules.
In 2023, this may once more be the case. Hamptons is forecasting that the average price in these elite areas of the capital will rise by 1.5%. This will be in contrast to the mood elsewhere as higher borrowing costs and the surging cost of living cause prices to flatline. Prices may drift back if interest rates are raised further than currently predicted.
Aneisha Beveridge, Hamptons head of research, comments: “Over the past five years, prime central London – or ‘PCL’, as we call it - has languished, partly as a result of the pandemic which kept the overseas crowd away. But, if sterling continues to weaken against the dollar and some other currencies, PCL property will become even cheaper for international buyers. Many are likely to view property as a hedge against inflation which may stay in double-digits throughout 2023.”
Beveridge adds: “Interest rates may be going up. But fewer affluent homeowners rely on mortgages. As a result, the average price in PCL in four years’ time could be 15.5% higher than today. We are forecasting an 11% increase for the rest of London over the same period, with a 10% rise for Great Britain as a whole.”
Househunters have already returned to the PCL postcodes, as Richard Broer, Head of Hamptons prime central London office, reports.
These buyers perceive property to be good value, partly thanks to sterling’s decline.
But they are becoming increasingly discerning in their choices, and this preference for the best houses and flats in the best streets and garden squares will only become more marked.
Broer comments: “In tough economic times, there tends to be a flight to quality. Buyers want only prime central London’s prime assets. That means quintessential locations like Sloane Square in Chelsea, Onslow Square in South Kensington, the Phillimores – which are the streets in and around Phillimore Gardens between Kensington High Street and Holland Park Avenue - and Ladbroke Square in Notting Hill.”
This insistence on quality is extending to other aspects of property deals, as Broer explains. He says: “In all my years of experience in this part of town, I have seldom seen so many questions being asked about service charges on blocks, both the amount and the terms and conditions. People are really lifting up the bonnet to see what’s underneath.”
Broer senses that buyers will also be paying more attention to the cost of any maintenance or work, mindful of the surge in materials costs caused by global supply chain issues and war in Ukraine.
Prime central London may be a rarefied zone. But, in the months ahead, it will not be immune to the geopolitical and economic storms blowing through the UK and the rest of the world.