As of mid-April 2023, prime London sales are down by more than 20% on the same period in 2022, while new instructions are rising, albeit slowly, according to independent property analysts at LonRes. In March, new instructions were up 2.4% compared with a year earlier. However, both sales and new instructions are up on their pre-pandemic averages.
Year to date, LonRes has seen an 11% fall in homes going under offer across prime London, which could signal a further slowing of sales activity in the months to come. With new instructions and average discounts both rising, this could result in further downward pressure on prices throughout the rest of 2023.
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“The prime London housing market slowed over March,” said Anthony Payne, managing director at LonRes. “Prices, transactions and properties going under offer were all down over the month, while new instructions rose. It seems as though the market, which is now back to pre-pandemic times, is finding a new level.
“Despite a rise in new properties coming to the market, stock levels are still low and anecdotally we are hearing that buyer demand remains strong. Agents tell us that good properties are being snapped up and for turnkey properties, where little work is needed, buyers are prepared to pay a premium.”
In contrast, the rental market continues to suffer from a lack of stock and with tenants staying put, inactivity is impacting all levels of the market, especially the less expensive prime London rentals.
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Properties priced at £5m-plus have been outperforming the wider market for many months, but in March, sales volumes at this top end of the market were 50% down year on year and just over 13% below the March pre-pandemic average. In short, this seems to be a return to a more normal market.
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By GlobalDataMeanwhile, increasing numbers of top end sellers are putting their homes up for sale. New instructions were up 115% on their March pre-pandemic average and the number of £5m-plus homes for sale at the end of March grew by 8% compared with the end of 2022.
These two metrics alone could indicate slowing demand, but the number of properties going under offer in this market suggests otherwise. Under offers grew year on year and are 150% up on the March pre-pandemic average.
The rate of annual rental growth slowed slightly in March, to 7.3%, but the lack of available stock continues to be a problem and is limiting activity. The number of new lets agreed was down 16.9% in March on an annual basis.
There is little sign of these trends changing in the short term as the number of properties going under offer fell by 9.3% and new instructions were 12.1% lower. All measures of rental market activity remain less than half their pre-pandemic levels, so any reversal in recent strong values is unlikely if these conditions persist, even if demand slips.
While these trends can be seen across all price points and locations, it is the under £500 per week section of the market that has been hardest hit.
