The value of prime Central London residential property has soared more than six times higher than the national average, according to new research.
In its second-commissioned “Prime Central London” report by Fathom Consulting, Development Securities has revealed that a typical prime residential building in the capital, has risen to just under £1.5m– six-and-a-half times the national average.
The price is almost 20% higher than in May 2012, when the first report was published. In addition the prices are more than 10% higher than Fathom’s economic model suggests they ought to be.
Michael Marx, chief executive of Development Securities, said overseas parties were still the dominant buyers in the luxury capital. He added: “The significant fact is that the weight of overseas capital coming into the UK is distorting the market.”
In the first report, uncertainty surrounding the Euro posed the biggest threat to high-end residential purchases, but this year, the study claims the largest worry would be the failure of the US Federal Reserve to engineer a smooth exit from its Quantitative Easing programme.
The report said the disorderly unwinding of the US QE programme could knock around 40% off global equity prices and about 20% off prime Central London property prices.
Marx said: “As a place in which to live, prime Central London is unique. But of course that does not make it immune from the laws of supply and demand. “With the average prime Central London property now a little under £1.5m, valuations have never been more stretched.
“We are less confident now than we were back in May 2012 that prime Central London prices are sustainable.”