Savills has upwardly revised its growth forecast for the prime Central London property market by 9 per cent, following the continuing strong demand for trophy homes in the capital by overseas buyers.
The property agent is now forecasting price growth for 2011 to be 8 per cent, an increase from its original prediction that prime property values in London would fall by 1 per cent this year.
Savills has also identified a new prime market for what it terms as “prime London”, in contrast to prime central London market which is dominated by overseas money.
It refers to prime London as locations dominated by domestic buyers, such as south west London, and believes these areas will see a smaller price growth of 6 per cent this year.
“Prices in prime central London are being propelled by international equity, while displaced domestic wealth is pushing up values beyond the centre, most notably through prime south west London wealth belt running from Battersea to Wimbledon,” said Yolande Barnes, head of research at Savills.
The property agent’s quarterly prime market figures show that prices in prime central London have increased by 6.3 per cent in the first six months of this year, while values in prime south-west London have risen by 3.5 per cent this year.
However, Savills has revised its forecast for prime regional locations downwards, from a fall of 0.1 per cent to a larger one of 3 per cent due to a lack of domestic wealth moving out of the capital.
It found that average prime regional values have fallen by 0.7 per cent over the past six months.
“The ‘priming of London’ is expected to continue as domestic wealth is increasingly displaced from central locations thus gentrifying new locations and underpinning price growth. The big question is when the ripple will kick in regionally, with just the earliest signs of this happening on the outskirts of London,” said Ms Barnes.