In the first quarter of 2024, London’s high-end property market took a bit of a tumble. Prices in Prime Central London have fallen, marking a 3.9% decrease as investors and homeowners alike hold their breath for a potential rebound. However, experts are suggesting that this drop might just be a short detour on the road to recovery, with promising signs indicating a stronger market as the year progresses.
A Slow Start with a Silver Lining
The recent report from the London Prime Property Index for Q1 2024 reveals a notable drop in property values across some of London’s most coveted neighborhoods. Yet, despite this downturn, Katherine O’Shea, the director of the Coutts Real Estate Investment team, remains optimistic. According to O’Shea, while we can expect “pretty flat” growth throughout this year, the next five years could see Prime Central London outshine other market areas. “Prime Central London is long overdue a rebound,” she explains, highlighting the subdued price growth over the past decade as a setup for a potential resurgence.
Market Trends – Demand Up, Prices Down
The dip in prices comes during a rise in demand. Many who held back on purchasing property in 2023—spooked by soaring inflation and interest rates—are now ready to make their moves. This pent-up demand, coupled with an increase in property listings and quicker sales, signals a robust pickup in market activity for 2024.
Katherine points out that despite the overall price drop, some parts of the capital appear to be “extremely cheap” relative to historical prices. This has led to an increasing demand for what agents call “best-in-class turn-key” properties—homes that are ready to move into without the need for renovations. Such properties are scarce, often leading buyers to pay asking prices or even above to secure their ideal home.
Where the Discounts Are Deepest
Despite the general price fall, bargains can still be found, especially in the prime central locations where buyers have been negotiating substantial discounts off the asking prices:
- South Kensington sees the steepest cuts, with 94% of properties selling below the initial asking price. On average, buyers have managed to negotiate discounts of 12.4%.
- Chelsea follows closely, with 90% of homes selling for less than listed, and buyers slicing off an average of 10.5% from the asking prices.
- Knightsbridge & Belgravia also offer good deals, with 86% of properties going for less than the sticker price and an average discount of 12.3%.
These large discounts are less common outside the traditional prime central zones. In peripheral prime markets such as Kings Cross, Islington, Hammersmith, and Chiswick, the discounts are notably smaller:
- In Kings Cross & Islington, 33% of properties sell below asking, with an average discount of 6.4%.
- Hammersmith & Chiswick sees about 52% of properties selling for less than listed, with buyers getting an average of 4.5% off the asking price.
Looking Ahead
While the market’s current state may seem daunting, the underlying trends suggest that Prime Central London could be gearing up for a significant comeback. With increased demand, rising sales, and the allure of significant discounts, now might be a golden opportunity for buyers to enter the market at a favorable point.