Sales Market
Summer 2018

It is just under three years since the peak of the market across prime central London, which is almost the same length of time as that of the economic recession of the early 1990s. However, while average prices across the capital fell by over 20% then, and 16% during the 2008 global financial crisis, average prices (per square foot) of properties across prime London are just 9% lower than their last peak in the summer of 2015 according to both LonRes and Knight Frank research.

Sales Market Figure 1Previous declines in the prime London housing market were primarily due to global economics, with the continued uncertainty surrounding Brexit remaining the major player this time. With less than three months remaining before the October deal deadline, price falls across the prime market appear to be bottoming out. Knight Frank report that prices across prime London fell by just 0.4% in the month of May.

Sales Market Figure 2New supply across the prime London market rose by 6% in the first half of 2018 compared to a year ago according to LonRes. Properties priced less than £1 million have witnessed the greatest increase in stock levels, a swathe of these undoubtedly from the rental market as landlords look to sell following tax changes and as sales prices stabilise. However, demand for properties remains highly price sensitive, with price reductions commonplace and withdrawal levels high. Although year-on-year sales in the first six months of 2018 are 3.9% lower, sales across the market in April to June rose 13% compared to the first three months of the year. This compares to a rise of just 0.5% during the same period last year. Sales of prime property, £5 million and above, have remained broadly stable.

The current prime London market is largely driven by those who have a need to move, for employment, education or personal reasons and the latest survey by the Royal Institute of Chartered Surveyors indicates surveyors expect little to change in the coming months. Annual price growth across the capital remains negative according to the May UK House Price Index, although month on month prices have risen by 0.1%, with inner London seeing a rise of 0.5%.