Prime Central London Tipped For Bounce Back

Latest property industry findings have found some “strong similarities” between PCL’s recent performance and what happened during and after the Global Financial Crisis – suggesting that the market could confound expectations over the next 18 months.

Pre-Covid, the London market was comprehensively outperforming the rest of the UK in the year to March 2020 with a 4.7% annual uplift (more than double the 2.1% recorded nationally, and the largest 12-month growth the capital had seen since December 2016); the situation was even more pronounced in PCL, where prices had shot up by 9.8% in the second half of 2019.

A reversal in fortunes was considered “long overdue”, given how much demand had been surpassed by a combination of punitive tax changes and Brexit uncertainty.

And with prices still down by around 25% on 2016/17 levels, the stage was supremely well set for buyers to return in larger numbers – all that was needed was a trigger. This came in the form of December’s General Election, and the semblance of political certainty unlocked in what has become known as the “Boris Bounce”.

The barnstorming performance in Q1 2020 – before the market hit a “road block” in the form of a global pandemic – recalls the events of a decade ago, when prices rose by a “staggering” 26% between March 2009 and January 2010; the increase across the UK over the same period was just 4%.

Circumstances are markedly different this time round, but PCL’s unique appeal is down to aspects that are unlikely to change any time soon, adding that the rule of law, GMT time zone, prestigious schools and universities, the global business language and a diverse and liberal culture will undoubtedly come into play again.

PCL transaction volumes have tanked by 47% over the last five years and totalled just 3,363 sales in the year to January 2020 – the lowest on record and less than an average of 65 per week – which is attributed to hefty transaction taxes and political uncertainty combined with a lack of distress.

With stock levels being where they are, it won’t take a huge improvement in sentiment to reignite one of PCL’s trademark resurgences, while more buyers and limited inventory will likely stimulate price growth.