Some prime property markets in central London are adjusting to the new stamp duty landscape more quickly than others and sales are rising, the latest research has found.
Demand and sales volumes have continued to improve steadily in 2017 as asking prices come down, although the scale of these rises is not uniform across all markets, according to the latest prime London sales market insight report from real estate firm Knight Frank.
It says that a number of economic, political and policy factors have affected the market over recent years, not least the snap general election earlier this year which weakened transaction volumes marginally over the summer.
However, deal volumes were up by 6% year on year between January and August as buyers and sellers increasingly assimilate higher rates of stamp duty, LonRes data shows. The number of new prospective buyers rose by 8% over the same period, according to Knight Frank data.
A separate analysis of Knight Frank and LonRes data shows Chelsea registered the largest decline in sales volumes in prime central London between the first half of 2014 and 2016, a fall of 54% compared to an average of 38%.
Underlining how some markets are recovering more quickly than others, transactions in this area climbed 24% year on year in the six months to June 2017, which was one of the biggest rises.
‘While there are clearly discernible signs of an improvement in activity, it is worth noting for historical context that sales volumes in prime central London remain 10% below 2015 levels and 28% below the levels of 2014,’ said Tom Bill, head of London residential research at Knight Frank.
The report also shows that in terms of pricing, average values in prime central London fell 0.2% in August while on an annual basis the decline was 5.4%, but Bill pointed out that this is the first time this measure has been above -6% since last November.
‘As with transaction levels, the pricing recovery is not taking place in a uniform manner and sensitivity to price remains high. Price declines are moderating in all price bands, although some appear to have begun a process of bottoming out before others,’ he explained.
Higher value properties outperformed lower value properties for the sixth consecutive month in August, and Bill said this demonstrates how the market is adapting to the changed fiscal landscape.
Prices between £5 million and £10 million were down 3.7% in the year to August 2017 compared to a decline of 5.4% across the whole prime central London market, and a drop of 6.7% between £1 million and £2 million.
‘The last time there was a similar outperformance was in the second half of 2009, during the initial stages of the global financial crisis, when the safe haven appeal of the prime London residential market rose strongly,’ said Bill.
Demand is also stabilising in prime outer London and an analysis of Knight Frank exchange data shows a 28% year on year rise in transactions between January and August. Average prices fell 2.2% in the year to August in prime outer London, although there were regional differences.
The east London index rose 1.1% while the southwest London index declined 2.4%. Meanwhile prices across Knight Frank’s north London offices fell 1.5%.
