The prime London sales market has been experiencing a period of stability, with little significant movement in property values over the past decade. However, the market saw a notable downturn in October, with average achieved prices falling by 3.3% compared to the previous year. This marks the largest annual fall since May 2021. Despite these fluctuations, prices have generally remained within a narrow range, hovering around the ten-year average.
Sales and Lettings Performance in October
Sales Market Dynamics
- New Sales Instructions: There was a decrease of 7.2% in new sales instructions compared to last October, and a 3.2% decrease from the pre-pandemic average.
- Property Transactions: The number of properties sold fell significantly by 29.5% compared to the previous year and 8.2% below the pre-pandemic average.
Prime Lettings Overview
- Rental Growth: Rental prices in prime London areas grew by 8.1%, continuing a 27-month trend of increasing rents.
- Properties Let: The number of properties let decreased by 3.7% compared to last year, and 54.5% compared to the pre-pandemic average.
In-Depth Look at October’s Market Data
- Price Adjustments: Sellers are increasingly adjusting their expectations, evidenced by a 15% increase in price reductions compared to last year.
- £5m+ Market Shift: This segment of the market saw a 31.6% decrease in sales volumes, while new instructions increased by 20.4%. Price reductions are now more aligned across different price points.
- Rental Market: The rental market remains robust, particularly in prime fringe areas, which recorded an 11.2% annual rise.
Factors Influencing the Market
Political and Economic Impact
The political upheaval during Liz Truss’s brief tenure as Prime Minister had a noticeable impact on the market. The prime London sales market hasn’t shown significant changes since then, with values slightly lower and activities returning to longer-term trends.
Supply and Demand Dynamics
- Seller Motivation: There is an indication of increased motivation among sellers, with fewer properties being withdrawn from sale and more price reductions.
- Rental Property Availability: The overall stock of rental homes has increased compared to last year but remains below the levels seen in 2019.
Expert Insights
Nick Gregori of LonRes observes that the prime London sales market hasn’t changed significantly over the past year, with values only slightly lower and activities aligning with long-term trends. He notes that the £5m+ market segment has started to align more closely with mainstream prime market trends. He also points out that the prime London lettings market is challenging to analyze due to limited property listings.
The Broader Picture
- Market Differences: Various segments of the market, such as sales and rentals, are showing different trends.
- Long-term Stability: Despite recent fluctuations, the prime London property market has shown a degree of long-term stability.