Prices for the best properties have lost 11.8% of their value from the peak of 2007, while those blighted by factors such as location, noise pollution or neighbours have dropped in value by more than a quarter, according to research by Savills.
The sharpest price falls have been seen in the lower price bands, and the ‘traditionally more volatile’ prime London market.
‘No property has escaped the falling market, but the best properties have been sheltered by their intrinsic rarity and quality,’ says Lucian Cook, director of Savills Research. ‘In a market where cash remains king these properties are significantly easier to sell. Despite having fallen less sharply than other properties, buyers increasingly recognise their current value compared to peak.’
Properties priced below £500,000 and that suffer from some sort of blight have fallen the most: 29% off their peak value. By contrast, the best properties in the same price band lost only just over 14% of their value. At the other end of the market, the best properties over £2million have dropped by just 11% and the worst by 26%.
‘The bottom end of the market has been hit by a lack of mortgage finance, with the mid tier succumbing to the fear of job losses and reduced bonus expectations, particularly in the wake of the collapse of Lehman Brothers which impacted most immediately and significantly on the prime London market.
‘Prices in the mid tier are now beginning to show signs of stabilising, particularly in the best prime London locations. We are seeing good quality homes in coveted locations attracting growing interest from cash and equity rich buyers. They are recognising that there is now value in quality, and the ‘best’, if realistically priced, will be the first to buck the trend and show signs of price growth when the market turns.’