The prime London housing market endured a subdued summer, with sales volumes falling and prices easing, latest data from LonRes reveals.
However a rise in new instructions and homes going under offer suggests activity could strengthen in the months ahead.
Sales activity was markedly lower in August, with transactions down 23.9% compared with a year earlier and 23.6% below the pre-pandemic August average of 2017–2019.
Achieved prices fell 3.1% on an annual basis and were 1.5% below their pre-pandemic average. Stock on the market at the end of August was 17.7% higher than a year ago.
HIGHER SALES VOLUMES
However, under offer numbers rose 13.3% year on year and were 18.4% above their pre-pandemic average, marking the third consecutive monthly increase. With the typical time from offer to exchange around 90 days, LonRes expects this could lead to higher sales volumes in the autumn, despite the number of fall-throughs rising 13.6% on the year.
New sales instructions in August were 10.8% higher than a year earlier, though 0.6% lower than their pre-pandemic level. Price reductions also grew for the tenth consecutive month, up 23.5% compared with last August.
SUBDUED TOP END
At the top end of the market, activity was even more muted. Transactions of £5m-plus homes fell 35% year on year and 39.1% below pre-pandemic norms.
Instructions in this sector increased 27% compared with last year and 56.7% against the pre-pandemic average, pushing available £5m-plus stock up 24.9% annually.
LETTINGS RESILIENCE
The rental market continued to strengthen, with annual rental growth reaching 4.3% in August and average rents now 37.3% above their pre-pandemic average.
Lets agreed rose 14.4% compared with last year, while new instructions climbed 15.5%. The stock of rental homes available was 21.4% higher than a year ago, though activity remains well below pre-pandemic levels.
SLOW SUMMER
Nick Gregori, head of research at LonRes, says: “August completed a slow summer for the prime London sales market, with rumours of significant property tax reform further dampening motivation for many potential buyers.
“Transaction levels were low, even taking typical summer levels into account, although higher numbers of new instructions and under offers suggest sales may rise in the coming months. The volume of price reductions continued to grow, translating into further downward pressure on achieved prices.
“The top end of the prime London market is subject to many of the same pressures, with higher supply from new instructions set against weaker demand. Where the market differs is that many top end vendors are less likely to be forced or even motivated sellers, as these are often investment properties or second (or third or fourth…) homes.
“So, while we are seeing a lot of price reductions, the scale of them in some cases has not been sufficient to tempt buyers.”
BUDGET WORRIES
And he adds: “At present (early September) the tax proposals have little certainty attached. We’ve seen a number floated in the press – partial removal of principal private residence relief from CGT, replacing SDLT and/or council tax with a national property tax, National Insurance on rental income.
“The Budget will take place in late November and it seems unlikely that all of these changes could be developed in time to be introduced then.
“But that won’t stop potential buyers worrying about the impact on values and perhaps put off any decisions until there is less uncertainty, which won’t help a market where confidence is already in short supply.”
