Statistics across several prime central London postcodes show a 10% drop in overall transaction levels for non new properties, according to the latest residential sales market report from agent W.A. Ellis.
The report also says that there is evidence for rises in values in the super prime sector remain patchy with only 17 sales for properties above £2 million with demand for laterally arranged flats currently outpacing houses. But performance is expected to pick up in the coming months.
‘Amidst the hyperbole surrounding the prime central London market and the endless speculation regarding a property bubble, there is a rather more realistic and sobering story emerging. Undoubtedly, the market beneath £2 million has surged ahead, fuelled in some part by foreign investment. However, if one looks at the transaction levels within some prime central London postcodes there is a diminution in overall transaction levels,’ said Richard Barber, partner at W.A. Ellis.
He said that transactions in areas such as Belgravia, Kensington and Chelsea, Earls Court, and Mayfair are down from 504 in the first quarter of 2013 to 452 in the first quarter of 2014, a reduction of over 10%.
‘While values have increased and vendors’ expectations remain high, it is interesting to note that transaction levels above £2 million are exceptionally low so the evidence for rises in values in the super prime sector is, at best, patchy,’ explained Barber.
He gave as an example the SW10 postcode of West Chelsea where there have been 58 transactions under £2 million in the last three months but only four transactions above this watershed figure.
Another example is SW7, where there have been 35 transactions under £2 million as against 57 in the first quarter of last year. Sales above £2 million are static, with a total of only 17 transactions in the first three months of 2013 and 2014 combined.
‘We have for some months been highlighting the strength of demand for laterally arranged flats and the relative lack of demand for houses arranged over five to six floors. This differential is accentuated within the sales transaction figures. Whereas in the first quarter of 2013, there were 107 house sales across the relevant postcodes, this year there have been only 92 within the same period,’ Barber pointed out.
‘Of course, statistics can be interpreted in many ways, and the first quarter of any year will traditionally show lower transaction levels. As we move in to a spring market and the traditional house selling season, we will undoubtedly see more house sales and this is reflected within our current pipeline,’ he said.
‘The overall trend, though, is that the demand for property beneath £2 million is still exceptional and will remain so, whilst the current Stamp Duty system continues to penalise transactions at even marginally higher values. The threat of a mansion tax and the ability to extend into much maligned basement space also continues to threaten transaction levels at the top of the market,’ he added.
