Sales in the central London prime property market continued to improve in July and prices falls slowed, according to the latest index report.
Average prices fell 0.1% in July and are still well below where they were a year ago, down 5.9% but it is the first time the annual fall has risen above minus 6% since last November.
The market overall is showing signs of improvement, according to the prime central London sales index from real estate firm Knight Frank and despite a more uncertain political backdrop, transaction volumes have risen compared to last year, aided by lower asking price
It points out that the most up to date LonRes data shows there was a 3% increase in central London sales in the first half of 2017 compared to 2016 and Knight Frank data shows a 23% rise, a difference that underlines how market activity remains inconsistent.
Furthermore, leading demand indicators continued to strengthen in the first six months of the year and an analysis of Knight Frank data shows the number of new prospective buyers between January and June increased 12% compared to 2016.
Meanwhile, the number of viewings was a fifth higher over the same period and the number of properties under offer at the end of June was a third higher than 2016.
‘While uncertainty surrounding the general election result and Brexit curbed GDP figures in the second quarter of the year, London remains a significant base for high net worth individuals, supported by factors that include a weaker pound and the country’s education system,’ said Tom Bill, head of London residential research at Knight Frank.
He pointed out that the combination of a weaker pound and price declines means the prime central London property market is 20% cheaper for a buyer denominated in US dollars compared than before the European Union referendum.
‘There are also signs the wider banking sector, which is an important source of demand, may not suffer from the effects of Brexit as much as initially thought. Although the full implications of Brexit are still unknown, recruitment company Robert Walters last month said banks were still hiring significant numbers of staff in London and suggested any contingency planning underway involves a comparatively small number of jobs,’ Bill explained.
Bill added that this was followed by the announcement that Deutsche Bank had signed a 25-year pre-let agreement in the City of London for at least 469,000 square feet and the tech sector, which is an increasingly significant source of demand, was also buoyed by the news that Amazon will increase the size of its UK headquarter and the fact over half a billion dollars were invested in British financial technology companies in the first half of 2017, over a third more than the same period last year.
