The highs and lows of London's property market PDF

Two years into the slowdown, the inhabitants of some London locations are facing a nightmare: their “prime” home, bought in the boom, may now be anything but. In 2007 Savills prepared a controversial league table to show how previously no-go areas had gone up in the world as wealthy buyers were forced into new postcodes. The chief beneficiary was Notting Hill, the scene of infamous riots turned aspirational address for international celebrities.

Two years after we revealed the league table, which sparked furious debate, Notting Hill’s presence on the Savills super-prime list is secure. And the list has expanded, with the addition of the North London stronghold of St John’s Wood. Yolande Barnes, a director of research at Savills, says: “St John’s Wood — like Hampstead — now has a following of its own. It attracts a broad range of buyers, some from overseas, who are less dependent on wealth generated in the City.”

But the mere prime category has proved less well protected. Economic uncertainty has forced buyers to be more prudent in their selection of an address, and when Savills updated the league earlier this year it decreed that Soho was no longer prime. Worse, Maida Vale, Paddington, Battersea, Hammersmith, Westbourne Grove, Streatham Hill, Stoke Newington and Crouch End were relegated to the third division. Since then, prices in London have shot up — saving some of these areas from permanent relegation — as our graphic shows.

Even so, Barnes warns that, after the slowdown, family buyers are ruthlessly examining the fundamental merits of a place — schools, transport, open spaces. Barnes says: “They no longer buy because it is next to their friends or the people they aspire to live near.” Hence, Wandsworth Common, Battersea Park and Primrose Hill are thriving as buyers leapfrog less illustrious Balham, Clapham and the rest of Battersea.

Two years ago Barnes counselled readers to beware the “high tide” mark, warning that the gentrifying areas could fall more quickly than established areas if the market changed. This has proved to be true across the UK — but some of the fastest-recovering parts of London are those only recently rediscovered as prime addresses.

Barnes says: “Early this year it looked as if anything but the pukka places would lag, but the areas that have recovered most quickly include Soho, Spitalfields, Westminster and Victoria.” Buyers are demanding an address from which they can walk or ride to work, as Boris Johnson, the Mayor of London, does. “People crave convenience. This preference shows the trendy buyer, the cash-rich, at work — the bank of Mum and Dad in action.”

Hotspots — or not?

Tipping a hotspot is easy when the market is rising — but what about when prices fall? Over the past two years, the cost of a three-bedroom home in London has dropped 5 per cent to an average of £301,800, according to Hometrack. In 2007 Savills said that these areas had prime potential. What happened next?

Tooting prices down 11 per cent to £369,800 for a three-bed home. Darren Monks, of Kinleigh Folkard & Hayward, says: “Developments which were put on hold have started again. There has been a recovery of 10 per cent this year.”

White City down 5 per cent to £535,600. Ian Dickson, of Winkworth, says: “The opening of the Westfield Shopping Centre — and huge investment in transport links — insulated W12 from falls.”

East Acton down 12 per cent to £406,000. Narendra Ghandi, of Winkworth, says: “East Acton still attracts buyers from Shepherds Bush and Chiswick wanting more square footage for their money.”

Camberwell down 16 per cent to £336,600. Justin Bhoday, of Kinleigh Folkard & Hayward, says: “Prices in Camberwell were down 20 per cent from their peak but the market has really gathered pace in the past four months.”

Stratford down 19 per cent to £232,200; Tulse Hill down 17 per cent to £303,200. John Saville, of Spicerhaart, says: “There was a frenzy after the Olympics news but Stratford has suffered in the downturn because other areas look better value. Tulse Hill, meanwhile, is tucked between Dulwich and Brixton, and attracts buyers from those areas looking for more value.”

Mill Hill down 14 per cent to £380,800. Richard Davidoff, of Winkworth, says: “Mill Hill suffered a softening of prices, but not as severe as the surrounding areas. We are now experiencing strong demand and lack of supply.”

Fortis Green down 9 per cent to £465,000. Nigel Ellis, of Prickett & Ellis, says: “Properties at the bottom end have not really recovered — where we were getting £280,000 to £300,000 for a flat, we are now asking £250,000 — but houses are back where they were in 2007.”

Finchley down 15 per cent to £390,700. Howard Greenfield, of Winkworth, says: “Finchley was relatively insulated from the downturn as its prices weren’t as inflated as surrounding areas.”

Kilburn down 15 per cent to £390,700; Brondesbury up 1 per cent to £380,900; Willesden Green down 4 per cent to £376,200; Cricklewood up 1 per cent to £380,900. Stuart Boyd, of Winkworth, says: “In 2006 and 2007 buyers spilt over into these areas, but confidence was hit hard during the downturn. However, as surrounding areas become less affordable I believe buyers will once again be attracted here.”

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