London's millionaire mansions are set for ‘a long overdue recovery’ in house price growth, agents have predicted.
A report by real estate advisory company, London Central Portfolio, has indicated the prime central London residential market has continued to witness positive signs over the past three months.
This is despite the uncertainties caused by the Omicron variant and some overseas property investors not yet travelling to London.
The data, provided by Bricks & Logic, suggested that average prices in the area have increased by 1.7 per cent. The February 2022 prices have now surpassed levels seen before the pandemic by 0.6 per cent.
Residential property in PCL yields have also spiked, the report said.
The average annual rental return for a flat in PCL was 3.4 per cent in February 2022. However, one must take into account that PCL has a significantly higher proportion of flats (87.5 per cent) than houses (12.5 per cent), which has driven the overall average.
According to Foxtons, the average flat price in central London is £1,091,708, while the average house price is £3,253,175.
Andrew Weir, chief executive of London Central Portfolio, said the current climate pointed "towards the investment opportunities within the flats sector.
"We have seen evidence of buyers seeking to acquire small apartments within prime addresses, as many professionals return to the capital.
"The gradual lifting of international travel restrictions and the full return of overseas investors will almost certainly see the performance gap between houses and apartments draw closer together once again."
PCL is forecast to see particularly strong activity over the next 24 months based on an anticipated return in travel from the world’s high-net worth individuals and a severe undersupply of homes for sale and rent.
Tom Bill, head of residential research for Knight Frank, told FTAdviser: "The return of international buyers has been erratic, it can be a bit more seasonal, so you might find more international buyers returning in April or May time…the story of prime central London this year is a long overdue recovery."
Two separate reports, published by Savills and Jones Lang LaSalle, also predicted similar increases of 8 per cent and 7.5 per cent respectively.
The greater London market, which excludes the prime properties in central London, has outperformed the central areas of the capital over the past 24 months, with prices increasing by 9.4 per cent since February 2020.
Bill added there has been an increase in people looking for space in greenery, "so house prices in Dulwich or Wimbledon are performing more strongly than Knightsbridge, Chelsea or Bayswater", he said.
However Bill explained: "London has an affordability problem… You have the race-to-space being layered onto that during the pandemic. This will start to recede, but that affordability squeeze is still going to keep driving people out of London."
When talking about the general scope of house prices in the future, Bill mentioned: "I would expect the regions as a whole to outperform London, in terms of house price growth over the next five years.