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London’s Luxury Market Sees Bright Spots

January saw moderate price growth in £5 million-and-up homes

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Elegant Georgian townhouse terraces in Mayfair, London

Julian Castle / ArcaidImages / Getty Images
Elegant Georgian townhouse terraces in Mayfair, London
Julian Castle / ArcaidImages / Getty Images

London’s luxury market is stabilizing after 20 months of price declines in the wake of tax hikes and economic uncertainty, January housing data shows.

Average prices in prime central London fell only 0.7% in the year to January, according to the latest figures from brokerage Knight Frank, released Thursday. The data backs up speculation that London’s high-end market has finally reached rock bottom and will stabilize this year, according to the report.

More:Rents Rise Throughout the U.K. for the First Time in 19 Months

By comparison, this time last year, prime prices dropped 6.7% year to year, according to the brokerage.

In 2017, the brokerage also recorded a higher ratio of prospective luxury buyers to new inventory for the first time in five years, indicating demand may put upward pressure on prices in the future.

Homes priced over £10 million (US$13.908 million) even saw a tiny 0.2% rise in the year to January, and average pricing for homes between £5 million (US$6.954 million) and £10 million rose for the third consecutive month.

More:How Will England’s New Double Council Tax Affect My Second Home?

On a neighborhood basis, Marylebone recorded the greatest appreciation in prime central London, with prices rising 5.5% in the year to January. Prime prices also grew in Mayfair (0.8%) and Kensington (0.7%).

Meanwhile, luxury rental data mirrored the turnaround happening in the sales market. Average prime rental values fell 2.1% in the year to January, the lowest rate of decline since April 2016—shortly before the British vote to exit the European Union.

The brokerage forecasts a 0.5% rise in the average rental values of prime central London as a once-oversupplied market re-balances.