Average prices in the prime central London property market fell by 4.6% in the year to September, the most modest fall since October 2016, according to the latest data.
Transaction volumes increased 9.8% year on year between January and August and new prospective buyers rose 4.9% in the first nine months of 2017, according to the index report from real estate firm Knight Frank.
It also shows that viewing numbers increased 9% between January and September but the number of new listings above £1 million was 18.2% lower than 2016.
According to Tom Bill, head of residential London research at Knight Frank, key indicators point to a market that is moving towards recovery mode with average prices in September being flat as they adapted to the relatively uncertain political backdrop.
Bill pointed out that the annual decline is the most modest reduction since October 2016 and annual price declines have shown signs of bottoming out since the start of this year, when a rate of -6.7% was recorded.
The report also shows that growth in higher price brackets continued to outperform lower price brackets, indicating how higher rates of stamp duty that initially affected demand at the top end of the market are becoming assimilated. Between £5 million and £10 million prices declined 2.3% in the year to September, which compared to a 5.3% decline between £1 million and £2 million.
‘The current pricing trend remains in line with our forecast for broadly flat price movement this year. There is certainly evidence that stamp duty has had a profound impact on the liquidity of the market and an adverse effect on achievable prices,’ said Bill.
‘To this end vendors are being forced to reduce asking prices to levels which, in most instances, equal or exceed the purchaser’s additional tax burden. The perception of value is a prerequisite to achieving sales,’ he added.
The report reveals that leading demand indicators show there was a 4.9% rise in the number of new prospective buyers registering between January and September 2017 compared to last year. Viewing levels were up by 8.9% over the same period.
While sales were up, buyers remain cautious and transactions are taking longer to undertake. The average time between listing and exchange in prime central London rose to 34 days in September from 27 days a year earlier, LonRes data shows.
There is also a degree of more restraint on the supply side, with levels of new stock coming to the market declining. There was an 18.2% drop in the number of new listings above £1 million across the whole market in prime central London between January and September compared to the same period in 2016, Rightmove data shows.
‘Despite the sense of uncertainty, London’s standing as a leading financial centre was underlined by a new report in September. The widely-read Z/Yen global financial centres index, which evaluates the competitiveness of global financial centres, showed London with a wider lead over New York at the top of the table,’ Bill added.
