Despite a backdrop of political uncertainty, sales volumes are rising in the central London prime property market as lower asking prices release pent-up demand, according to the latest research.
Indeed, November was the second highest month for sales volumes in 2016 after a stamp duty spike in March, says the analysis report from international real estate firm Knight Frank.
The number of Knight Frank sales in November was higher than the same month in 2014 and 2015 and the year on year decline in sales volumes narrowed to -19% in November from -38% in June, however, annual growth was down 6.3% in December.
But prices have not risen at all in the prime central London market in 2016 with values down in all areas apart from City & Fringe where they were static.
The downturn in annual prices has been led by Chelsea and Hyde Park with a fall of 13.5%, followed by Kensington down 11.3%, Riverside down 9.9%, Notting Hill down 9.7%, Knightsbridge down 7.9%, and South Kensington down 7%.
The fall in prices have been less pronounced in other areas. In Islington they fell by just 0.7% and in Tower Bridge by 1%. Prices were down 3.6% in St John’s Wood, down 4.1% in King’s Cross, down 4.5% in Mayfair and Marylebone, and down 5.1% in Belgravia.
The report explains that the second half of 2016 was marked by a steady improvement in sales volumes as vendors lowered asking prices to reflect the changed regulatory backdrop in prime central London.
An analysis of sales volumes for this year shows that following a spike in March ahead of a stamp duty hike and fewer transactions in subsequent months as uncertainty around the European Union referendum intensified, activity has risen steadily in recent months. This pattern is in contrast to last year, when there was a pick-up following the May general election.
In respect of the first 11 months of 2016, Knight Frank data shows November accounted for 14.1% of total sales, the second highest month after March. Indeed, the number of Knight Frank sales was higher in November 2016 than the same month in 2014 and 2015.
‘We observe a similar though less marked uptick in the wider London market, with November accounting for 10.1% of sales recorded in the first 11 months of 2016, the third highest figure after 10.8% in February and 18% in March,’ said Tom Bill, head of London residential research at Knight Frank.
Further analysis shows to what extent transactions have stabilised since the summer. While sales volumes were 38% lower in June compared to 2015, this gap had halved to -19% by November. The equivalent figure compared to 2014 narrowed to -18% from -45% over the same time period.
