The prime central London property market continues to recover on the back of higher demand, amid the easing of lockdown restrictions and the subsequent return to the capital as prices in the region continue to grow.

The latest research from Savills shows that property prices increased in Q3 2021 for the second consecutive quarter, rising 1.4%, indicating a turning point for the central London property market.

The study appears to suggest that the prime central London market has bottomed out and is growing for the first time since September 2014, despite the absence of international buyers.

This uptick has, according to the data, been led by growth in Notting Hill (+4.6%), Bayswater (+3.3%) and Holland Park (+2.6%) prime markets, and has been particularly driven by larger homes with gardens.

The value of prime homes in other parts of the capital also continued to grow on the year. Prices outside of central London are up by an average of 2.7% on an annual basis, again underpinned by demand for large family homes, although growth across a wider range of properties is starting to return.

Table 1: Quarterly and annual growth across prime London

Most strikingly, the value of prime London houses with six or more bedrooms has risen by an average of 6.2% in the past year, while values of five-bedroom properties have grown by 5%.

Lucian Cook, head of residential research at Savills, commented: “Families searching for space has been the driving force within the prime London market throughout the pandemic. These buyers have been spurred on by the low-interest-rate environment which has cushioned any impact of the tapered withdrawal of the stamp duty holiday.

“However, as we edge back towards normality, we are seeing prices rise across a wider range of properties.

“Year-on-year movements in the capital value of two and three-bedroom homes in London’s most desirable locations have now moved into positive territory. We are beginning to see the return of demand for the pied-a-terre in London, particularly from those who bought in the country.

“Consequently, prices for prime central London flats have grown on the year [+0.6%] for the first time since the 2014 market peak.”

Cook added: “A lot of these changes have been driven by the changing priorities of those who have either started to return to the office or who are contemplating it. In our September buyer survey proximity to the tube or train station took over from proximity to a park or green space at the top of buyers’ wish lists.

“Meanwhile we are yet to see the full force of international demand return to a prime central London market that continues to look like good value in a historical context. As international travel is progressively reinstated, we expect to see more pronounced price growth in this market, which has been a long time coming. “While we expect prices to end the year around 2.0% higher in 2021, we expect annual price growth to rise to 8% next year.”