The London property market has witnessed significant shifts, especially since the pandemic. Initially, properties were frequently sold at considerable markdowns as sellers entered the market with high expectations, only to reduce prices in response to strong buyer negotiations. This trend of heavy discounting became a defining feature of the post-pandemic real estate landscape in London. However, the latest data indicates a change, signalling that the days of easy property bargains may be drawing to a close.
The Decline of Heavy Discounting
Recent research from Hamptons estate agency has highlighted a significant shift in the London property market dynamics. According to their findings, while over 40% of homes still experience price reductions before securing a buyer, the number of properties selling at or above the asking price is increasing. In fact, one in three London homes now sells for more than its listed price, a rise from less than 25% in the previous year. This increase places London above the average for England and Wales, where only 27% of homes exceed the asking price.
This trend suggests a competitive resurgence in the London property market, with homes now achieving 99.2% of their final asking prices on average, marking the best performance since early 2022. This is a recovery, considering the impact of rising interest rates beginning that year. Furthermore, it’s the first time since 2016 that London’s average property discount matches that of the rest of England and Wales.
Insights from Industry Experts
Becky Munday, the founder of Munday’s estate agents in southeast London, acknowledges that some properties are initially overpriced due to aggressive competition among agents vying for listings by promising high returns. Additionally, some sellers adopt a strategy of starting high and reducing prices later if necessary. Despite these tactics, properties that are priced sensibly from the start attract plenty of buyers, especially flats, which are seeing prices go above the asking due to high rent costs making ownership more appealing. However, Munday pointed out that flats with high service charges, like some in Southwark with annual fees as high as £3,000, face difficulties in attracting buyers.
Market Analysis and Future Outlook
Aneisha Beveridge, head of research at Hamptons, interprets the data as indicating a shift towards a more balanced market. With fewer homes available compared to last year, and increased competition, properties priced in line with current market realities are performing well. Looking ahead, Beveridge predicts that while house prices might not see significant increases this year, the volume of transactions is expected to grow. She anticipates a quicker recovery in the number of people moving homes compared to the rate at which house prices increase.