Fears that property values in the West End of London are on the verge of collapse are false.
While values in upmarket Kensington High Street have dropped 11.8% to reduce the average value of a home in this exclusive neighbourhood to a fraction under £1.8m, values in east and west Soho and nearby Regent Street have climbed between 24.4% and 30% in the 12 months to April 2016
In fact, the average price of a studio flat in Soho now stands at £814,985, while a three-bed property in the same area has an average value of £2,113,564.
London’s position as a world leading centre of business, combined with its unrivalled history, culture and entertainment options, will mean that demand for property in the city will continue to outstrip its supply.
Commentators point to political uncertainty fuelled by the possibility of the UK voting to leave the EU as a reason for overseas investors to turn their back on property in the capital.
Chancellor George Osborne – who is in favour of the UK remaining in the EU – says a vote to leave would cause a “significant shock” to the housing market.
He says: “I’m pretty clear that there would be a significant hit to the value of people’s homes and to the cost of mortgages, that is one example of the kind of economic impact that we get from leaving the EU.”
But London as a whole and the West End in particular does not have enough homes to satisfy demand.
Average house prices in London rose by 9.4% in 2015, down from a peak annualised growth rate of 20.1% in May 2014 but up from the low of 4.4% in April 2015.
While short-term economic doubts, coupled with significant tax hikes for property investors, may cap a rise in values in central London, they will do nothing to limit demand.
In fact, a vote to leave the EU could lift property values because it is likely to leave London, and the rest of the UK, woefully short of the people with the skills to fulfil our housebuilding needs.
All the time demand for quality homes in central London outstrips their supply, values will hold up, says central London estate agent LDG.
The Fitzrovia-based business points out that rents have climbed steadily in this part of central London that is is tucked away between the wealth of Marylebone, the edgy energy of Soho and the grandeur of Bloomsbury.
Prices can range from £500-550 per week for a one-bed flat in a converted period property to £900 per week and upwards for a three-bed flat in a purpose-built apartment block, with penthouses offering roof terraces, the services of a 24-hour concierge and other luxury facilities commanding weekly rents of £1,100 and above.
LDG says the predominant profile of our tenants will be from the private sector, although we think the holiday lets will continue to increase because of the ever-popular attraction of London.