Prime London market gathers pace

According to the LCPAca Residential Index for May 2019, the London prime property market is beginning to gain pace. Good news for Londoners, but how about elsewhere? Naomi Heaton, CEO of LCP, comments.

Prime Central London

Annual transactions in Prime Central London (PCL) in May stand at just 3,282, a drop of 14.2% annually, with just 63 sales per week. Whilst this is an almost 40% fall on pre-Referendum levels, the momentum seen since the beginning of the year continues, with quarterly sales rising by 37.9%, the largest increase in activity for over two years.

Average annual prices reached a record high of £1,913,040. Quarterly prices also increased by 13%, pushed up by the sale of several high-value properties in March and April, but growth subsequently flatlined in May.

The “wait and see” attitude, endemic since the EU Referendum in 2016, appeared to start turning ahead of the Brexit deadline of March 29th, with investors wanting to capitalise on weak sterling and discounted prices.

Whilst the extension of the deadline appeared to have initially dampened investors’ enthusiasm, there has been a notable change in market sentiment and several estate agents are reporting improved trading conditions. It would appear investors are no longer prepared to sit on the side-lines whilst the UK makes up its mind.

Historically, the PCL market has bounced back swiftly when sentiment improves, so the window of opportunity to cut a good deal at rock bottom prices could well be a small one.

Greater London

Average prices in Greater London for May reach a record high of £628,283. This represents a rise of 1.7% over the month and an increase of 3.2% over the quarter, despite modest growth annually of 2.5%.

Transactions over the last quarter have also seen an improvement with a rise of 13.8%. However, on an annual basis the total volume of sales stands at 86,338, which is a fall of 3.2%.

Greater London is into its fifth year of falling transactions, with a total drop of 27.4% since 2014. Higher purchase costs, political uncertainty and short-sighted policies aimed at winning easy votes continue to hamper recovery.

The quarterly figures do offer some encouragement, but this could well be due to the ‘false’ Brexit deadline of 29th March, as buyers sought to pre-empt an anticipated market rally post this date.

With the Conservative leadership contest ongoing and the prospect of a hard Brexit, what the rest of the year will bring and its impact on the housing market is hard to predict. Nevertheless, it appears that investors, if not domestic home buyers, are increasingly unwilling to wait.

England & Wales (excluding Greater London)

Average prices in England and Wales (excluding Greater London) stand at £254,839 for May. This represents a quarterly fall of 1.3% and annual growth of just 3.5%, the lowest since 2013.

Annual transactions in England & Wales have fallen by 0.9% to 797,460. However, as with London, they have seen the same quarterly spike, with a rise of 10.4%.

Whether we will see a further fall in transactions of the same magnitude already seen in London of almost 30%, is difficult to predict. However, they have been in steady decline since the EU Referendum.

Overall, England and Wales has turned in a more robust performance than the capital in recent times. The high purchase costs that have hit London hardest have not been felt as acutely and with a smaller proportion of investors, transactions have been more resilient.

However, any economic fall-out from Brexit is likely to have a far greater impact in England and Wales, which is primarily a domestic market, than in London, where the uncertainty has already been factored in.