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2020 Builds On The Positive Momentum Of The End Of 2019

12.08.20

While the quarterly increase of 1.3% wasn’t quite as dramatic as the 3.1% in the previous quarter, it shows that the momentum established at the end of 2019 continued at the start of 2020.

Prime property prices in London were up 6.6% on the year before. Significantly, 6.1% of this growth came in Q4 2019 and Q1 2020 – during the six months that saw the Conservatives victorious in the UK general election. Markets were more active and buyers were becoming more competitive – sales volumes were up 4.9% and discounts between asking price and selling price narrowed to -9%, the lowest we’ve seen since the index began. Across prime London, 43.6% of properties are now sold at a discount to the asking price.

Katherine O’Shea, of Coutts Real Estate Investment Service, says, “Increased activity in the more traditional prime markets was a big driver of growth last year. For example, prices in Knightsbridge & Belgravia grew by 8.7%.

“In Q1 the market seemed to be creeping up once more,” she said, “but we’re still -9.9% below the 2014 peak. With lockdown stalling markets for now, the question for buyers has to be, will the positive momentum carry on after restrictions are lifted?”

Gross yields have remained stable for the last five consecutive quarters and currently stand at 3.9%. Gross yields in more central markets – where prices are more elevated – are still hovering around 3%.

Perhaps the most interesting figure is the number of prime properties under offer across London. This stood at 673 at the end of the quarter, an increase of +30.1% compared to a year ago and the highest figure we’ve seen since our index began.

Katherine explains, “This looks like a clear sign confidence had returned to the market at the start of the year, following the general election. But it’s also an early indicator that deals were being put on hold after the coronavirus containment measures took hold and the market started to close down.”

Transactions – and therefore data for our survey – came to a halt at the end of the quarter. As we enter Q2, it remains to be seen if the trend will continue or if the coronavirus outbreak will make a longer-term dent in the market.

Until we know how long the current situation will last and how it will alter the domestic and global economy, it will be difficult to predict what might happen next. The prime market is usually the first to show signs of recovery and should be a good barometer for the general property market.

“Increased activity in the more traditional prime markets was a big driver of growth over the year. For example, prices in Knightsbridge & Belgravia grew by 8.7%”

Katherine O’Shea, Coutts Real Estate Investment Service

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