Sales increase in prime central London and price decline slows
Sales in the prime central London market increased by 4% in the second quarter of 2019 compared with the first three months of the year and are set to keep rising in the next 18 months, according to the latest analysis.
The number of properties being marketed also increased, up 3%, and despite prices falling again, the price decline in the second quarter was slower than in recent months, according to the research from JLL.
Overall, the sales market has shown positive signs of resuscitation after five years of stunted growth and it was the first quarterly rise in supply for a year. While the total number is still 15% lower than that of 12 months ago, the report says that it indicates that sellers no longer feel willing to wait for the current period of political and economic uncertainty to subside.
Although prices have fallen for a fourth quarter in a row, the decline of 0.2% is the smallest quarterly drop in a year. Price falls continue to be greatest for higher end properties. In the £10 million plus market prices have fallen by 4% year on year compared to the 0.9% fall in the sub £2 million sector.
‘Following a relatively muted start to the year, our second quarter figures suggest that the prime central London market is gradually turning a corner. With sales and marketing activity increasing, there looks to be a newfound willingness to engage in the sector once again,’ said Richard Barber, director of residential sales at JLL.
In the lettings market there were fewer new rental agreements but more tenancy renewals in the second quarter of 2019. Sales fell by 16% year on year but the increased 3% quarter on quarter. JLL says this suggests that the slowdown in annual transaction levels could be coming to an end.
Rents have now risen in each of the past six quarters. Growth was highest at the lower price points at 3.2% year on year but in the lowest sector, £3,000 per week, average rents remain unchanged.
The report says that the one bedroom, new property and High Net Worth student markets are seeing particular popularity and supply challenges are pushing rents up.
‘Tenants’ decisions to renew despite rising rents suggests both continued caution about the Brexit outcome, as well as an affinity and comfort with the area in which they live,’ said Lucy Morton, JLL’s head of residential agency.
‘HNW students are causing increasing competition in parts of the market, putting further pressure on one bedroom and new property stock and often out-pricing previously dominant professional buyers,’ she added.