THE CURRENT CENTRAL LONDON DOWNTURN IN CONTEXT
We recently attended the launch of the Savills Prime Residential report at the Hurlingham Club. Lucian Cook, the Head of Residential Research was as enlightening and engaging as ever.
We were interested to learn about the current central London downturn in the context of the late ’80’s downturn and the late ’00’s downturn:
In June 89 to December 92 – prices fell over 11 quarters and by 25.6%. With a bounce of 99.6% in the five years following the market bottoming out.
In September 07 to March 09 – prices fell over 6 quarters by -22.2% with a 5 year bounce of 79.4%.
Since June 2014, the downturn has been over 16 quarters and set to continue due to market uncertainty. So far prices have fallen by -18.4% .
Despite the prospect of gradually increasing interest rates, a general election scheduled for 2022, and greater exposure to taxation, we forecast a return to price growth from 2021. Barring a full-blown recession or dramatic change in domestic politics, we expect the recovery to be underpinned by London’s continued appeal to both commerce and global wealth, though it is likely to be less dramatic than in previous cycles.
THE CHANGE IN OFF PLAN SALES RATES
2015 – All prime buyers exchanging contracts 2.5 years off plan .
2018 – Prime buyers exchanging contracts 1 year off plan.
2018 – Super prime buyers exchanging 1 month off plan.