Over the period since June 2005, price movements in the prime East of City market, comprising of Wapping and Canary Wharf, have more readily tracked the wider London market than the other established prime markets in the capital. Accordingly they have not seen the dramatic price growth of prime central London or indeed the more domestic markets of prime South West and North London.

While showing slightly lower price growth than the mainstream markets of London as a whole in the period 2006 and 2007, in aggregate these markets have seen stronger price growth since the market bottomed out in 2009 (see Graph 1).

Price growth of 26% since the middle of that year has contributed to the fact that prices are just under 4% over their levels at the previous peak of the market in March 2008.

However, there are variations between submarkets. Generally,
the warehouse conversion market of Wapping has significantly outperformed the purpose built flat markets of Canary Wharf (see Graph 2).

Over the past five years price growth of 21% in the former compares to growth of just 7% in the latter.

This reflects the extent to which the Canary Wharf residential markets have had to absorb new build stock completed during this period. Land Registry figures suggest that over the last five years new build sales have accounted for 42% of all residential transactions
in the market.

In 2009 and 2010 the contribution of six large schemes (Baltimore Wharf, The Icon, Phase 1 Canary Quarter, The Forge, Mastmaker Court and The Landmark) were completed with corresponding sales of 1,500 units. These significantly distort the picture of the capacity of the market relative to the pre crunch period, which is perhaps better reflected by levels of second hand sales which were 56% of their 2006/2007 levels in these two years.

Initial Land Registry figures for 2011 suggest a more normal balance between new build and second hand sales, though looking into 2012 there appears to be a real shortage of new build properties which is likely to support prices in the short-term.

Taken from
Market in Minutes: Prime East of City, June 2012