London Buyers Prepared to Spend 20% More

The coronavirus pandemic may have stalled real estate transactions across London, but buyers haven’t disappeared; they’re just waiting in the wings, according to a report Monday from Knight Frank.

As of May 5, the combined budget of all potential buyers registered with Knight Frank in London was £52 billion (US$64.2 billion), a 20% increase from the £43.5 billion registered buyers were collectively prepared to spend on the same day in 2019, the estate agency and property consultant said. 

At the same time, transaction numbers in the city in the week ending May 2 were 54% below their five-year average.

The U.K.’s coronavirus lockdown, which has shuttered businesses and schools and halted much of the real estate market, went into effect on March 23.

Across the country 223,060 people have tested positive for coronavirus and 32,065 have died as of May 11, according to the country’s Department of Health and Social Care.

Not only are London buyers currently proving hesitant to make moves, but sellers are, too.

The number of new properties placed on the market in the week ending May 2 was down 74%, and in each of the four weeks leading up to May 2, supply fell by more than demand, “a trend that will act as a brake on price declines,” according to the report.

“That said, the difference between asking prices and exchange prices is widening,” Tom Bill, head of London residential research at Knight Frank, said in the report. “In April 2020, the average sale price was 94% of the original asking price, down from 97% in January, which was a time when the effects of the so-called Boris Bounce started to take hold.”

“This reflects the ad-hoc renegotiations that are taking place between buyers and sellers, which are not based on comparable evidence,” Mr. Bill added.

The U.K.’s property market had been enjoying a prosperous start to the year following Boris Johnson’s re-election in December, and property prices nationwide increased 3.7% annually in April, according to a report from Nationwide.