THE CURRENT explosion in Prime London house prices cannot be sustained into the next few years, Marsh & Parsons said yesterday.
Prime London house price growth will slow down to between three per cent and five per cent next year, the estate agent forecast, after expansion running at 11.1 per cent over the past 12 months, putting the slower movement down tax changes and reduced City demand.
“We’re not going to see the spectacular price rises seen in the past couple of years,” said Marsh & Parsons boss Peter Rollings, “but London’s prices aren’t going to completely flatline.”
But demand won’t completely drop off, Rollings said, suggesting that President Francois Hollande’s tax hikes are still driving wealthy French nationals to “reassess their options.” And crisis-hit Spain and Portugal could actually contribute to demand, Rollings said, as citizens flee high unemployment, state debt problems and, again, big increases in tax burdens.
On the other hand the rental market may improve, but in the other direction, the estate agent predicted. Average rents fell 2.8 per cent in the year to date, driven by weakness in the higher end of the market – rents of more than £2,000 per week. However, rents lower than £1,000 a week were rising, Marsh & Parsons said, and will grow eight to 10 per cent through 2013, as unsuccessful buyers pile into the rental market.