A new expression has entered the property lexicon; the reverse ripple effect. Since the financial crash in 2008, we’re all used to price rises rippling out from the centre of London. The place to watch now is the area around it, known as Emerging Prime.
You might assume that a reverse ripple simply means where prices fall in London, they’ll fall elsewhere. But, like so much in the current property market, nothing is that simple. Prices in Emerging Prime have plateaued, but hide distortions. Our figures show that, in the important £1.1m-£1.7m house market, prices have actually dropped back to what they were.
Over the last two years, buyers previously looking to live in sought-after Nappy Valley, for example, had been seeking affordable freeholds further afield in Southfields. But as we’ve seen prices fall back, buyers have suddenly realised they can now afford to live where they originally wanted and are looking centrally again – hence the reverse ripple effect.
Investments in smaller flats is strong at the moment, feeding the insatiable private rented sector. A corollary of this has been a big fall off in rental demand for houses in Emerging Prime, too, making them more affordable than they’ve been for years. It’s complex, but the reverse ripple effect may mean it’s time to reconsider properties in areas that were out of reach a year ago.