Local market report and housing update
Winter 2022/23
Snapshot & Location
Located in the central parts of London, the City of Westminster and Kensington and Chelsea make up the largest portion of the Prime Central London market. These areas have a high degree of wealthy, affluent neighbourhoods noted for their historic heritage homes, handsome Georgian architecture, grid of streets and
upmarket housing.
Location Map
Local demographics & economic trends
The population across the prime central London boroughs of Kensington and Chelsea and Westminster is estimated to have reached 426,780 in 2022, reflecting a strong increase of 13% over the last decade, equating to an additional 48,000 people. Looking ahead, and as most places across the UK the pace of population growth is expected to slow, growing by just 4% over the next ten years, adding just under
17,000 people.
Although the level of employment seems a bit low for the area, at around 68% (75.5% is the national average), those who are employed in the boroughs tend to be in higher managerial, directorial, senior and associate professional occupations, making up around 73% of all those employed, which compares with a national average of just 51%. The average income in this area is also much higher than the national average, with a mean income of around £78,000 per annum compared with £38,000 nationally.
Connectivity
Due to its central location, all areas of prime central London are incredibly well connected to the rest of London by Underground via dozens of Underground stations such as Baker Street, Oxford Circus, Green Park, Marble Arch, Regent’s Park, South Kensington, Victoria, Knightsbridge and Hyde Park Corner among many others. These stations provide access to London’s most major Underground lines including the Bakerloo, Central, Piccadilly, Jubilee, and Victoria. Marylebone national rail station is located at the north end of Marylebone, Victoria national rail station is a short distance to the south east of Mayfair whilst London Paddington is located just north of Hyde Park. Naturally, most areas are also well serviced by London Taxi services available across all parts of London.
The local Housing Market
Sales Market
Average house prices by property type and location
City of Westminster
Kensington and Chelsea
England and Wales
Detached
Semi-detached
Terraced
Flat
Overall Average
£3,033,298
£2,564,448
£1,719,709
£899,577
£967,166
£3,955,169
£4,048,156
£2,684,374
£1,151,664
£1,355,928
£488,076
£298,211
£253,644
£253,542
£311,074
Source: HM Land Registry (October 2022, latest data)
"Despite transaction volumes at or above their longer-term average so far this year, the prime central London housing market has seen house prices decline by around 7% over the last 12 months to an average of £1,161,547"
Chart
Chart
Rental Market
According to the latest data from the Office for National Statistics (ONS), average rents in Westminster are £2,359 per calendar month (pcm) while across Kensington and Chelsea they are £2,716 pcm. This is almost 45% and 67% respectively, above the wider London average of £1,600 pcm and reflects the centralised, aspirational, and affluent locations in Westminster and Kensington. People are clearly paying a premium to live in these central areas with such a high level of amenities and reduced travel costs at their disposal.
Prime Central London
Together they host a large number of fine-dining restaurants, designer and luxury shops and boutiques, world-class schools and universities and are home to many of London’s major attractions accessible by walking, cycling, taxis and the
London Underground.
The areas are internationally renowned for being an aspirational and affluent area of London due to its historic and preserved architecture, luxury international shopping
and ample history and heritage.
The areas of Marylebone and South Kensington in particular are popular with young people and family’s seeking a central location while maintaining a neighbourhood feel, while places like Holland Park and Mayfair are popular with all types of demographics, both domestically and internationally and particularly those seeking to be in some of London’s most prestigious and well-located central areas.
Again, this reflects the affluence of the areas and the local demographics being made up of many highly professional households.
The prime areas of these boroughs including Belgravia, Mayfair, Marylebone and South Kensington attract a young, professional, and affluent demographic looking to achieve an aspirational lifestyle by being located in such prestigious locations. Across the area 27% of the population is between the ages of 25 and 40, so it is no surprise that there is a high proportion of renters here. Current estimates put the number of private renter households at 74,000, or 36% of all households. In some areas of prime London this is even higher, for example in Marylebone and Mayfair 50% of all households are privately renting. On the other hand, over 36% or 5,170 households in this area are owner occupied.
Despite transaction volumes at or above their longer-term average so far this year, the prime central London housing market has seen house prices decline by around 7% over the last 12 months to an average of £1,161,547.
The Local Housing Market
Average house price
Average house price growth
Average rent
(£ per calendar month)
Annual rental growth
Gross Yield
£1,161,547
-7.0%
39%
£3,500
3.0%
Sources: HM Land Registry, REalyse
Towards the end of 2022, rents in prime central London locations were seen to have risen sharply and across both Kensington and Westminster rents are now averaging over £3,500 pcm (REalyse, October 2022). This figure marks an exceptionally strong rental growth figure of 39% over the last 12 months. As with other central urban locations though, during the pandemic and various lockdown restrictions much of the central London private rental market saw a dip in rent rates (particularly in flats) as people moved away from urban locations. This resulted in rents dropping considerably last year. This trend has now all but completely reversed, resulting in a huge jump in average rents over the 12 months period. When compared with average pre-pandemic rate this shows a more modest growth rate of 11% since February 2020.
Sources used: Carter Jonas Research, Experian, Google maps, HM Land Registry, Office for National Statistics, REalyse, Rightmove
Notes: REalyse rental data 12-month rolling average
Get in touch
For further information, please get in touch with one of our local experts
Many of London’s top attractions, luxury shopping and world-renowned restaurants are located in the prime central areas of London and can be easily reached either on foot, Underground or by car.
Similarly, it is well connected to many of London’s world-class universities, including: -
Location based on nearby top-performing primary and secondary schools is often a very strong factor in deciding where to move and locate, with proximity to the best schools strongly correlated to local average house prices. Research has shown that homes located near top-performing schools can add anywhere from £20,000 - £50,000 to home values. Across Kensington and Westminster there are 18 secondary schools and 134 primary schools, of all types including private, preparatory, independent, faith based and state schools. Of these, 68, or nearly half, are private or preparatory schools, while of the state schools 35 were marked Ofsted ‘Outstanding’.
University
Distance from Bond Street Tube Station
The University of Westminster
0.4 miles
Regent’s University London
0.9 miles
Central St Martin’s
0.9 miles
University College London
1.2 miles
SOAS, University of London
London Business School
London School of Economics
King’s College London
Imperial College
Royal College of Art (Kensington)
Chelsea College of Art and Design
City, University of London
Bayes Business School
1.2 miles
1.3 miles
1.5 miles
1.6 miles
1.8 miles
1.8 miles
2.1 miles
2.4 miles
2.7 miles
During the pandemic period the inability to travel hampered the international market (which is normally a strong driver of demand in this area), while the high average house price often deters other potential buyers who might look slightly further afield in more affordable locations. As a result, the lack of demand meant that not only have average prices declined over the last year, but they have hardly moved at all since 2020 in prime central London. Compare this with average price growth of 28% across England and Wales over the same period.
Unlike many other parts of the country during the course of the pandemic, associated restrictions and the resultant stamp duty holiday, by and large the number of overall transactions remained at or below the longer-term average across Prime Central London on a month to month basis. However, when aggregated the number of exchanges during 2021 was still nearly 15% above the long-term annual average. This was mostly due to over 1,000 exchanges taking place in June 2021 alone.
During 2022 sales have moderated somewhat, reaching around 305 exchanges per month, down only slightly from the long-term average of 316 per month. Looking ahead, we don’t expect that demand will decline much, if at all, in this market. The prime market is driven by many factors other than just mortgage rates, which plays a much bigger role in the housing market in the rest of the UK. Exchange rates that favour international buyers are expected to continue over the course of 2023 and with international buyers and cash buyers playing a much bigger role in this end of the market, we anticipate they will prop up prices in this market. As such, we expect prices to remain at their current levels next year, possibly declining by around 2% if the level of available supply does not match demand.
House price growth and rental rises over the last 12-18 months has resulted in gross yields moving out as well. Currently prime central London yields are around 3.0%, up from 2.7% pre-pandemic and 2.4% over the same period last year.
Notes: Rental rates areas: five-mile radius from centre. Projected house price
growth, incomes and demographics data, areas: Respective local authority
2032 forecast
population
(number)
443,745
Ten-year forecast population
(% change)
4%
Proportion of population who are owner occupiers
40%
Proportion of
population who are private renters
35%
Average annual
income
(2022, provisional)
£63,488
Five-year projected house price growth (cumulative)
1.8%
Email me
020 7486 8866
Sales
Samuel Richardson
Email me
020 7493 0676
Lettings
Kim Bays
