May 2023 saw diminished buyer confidence and a slowdown in the Prime London housing market, with conditions reflecting pre-pandemic levels, according to an analysis by independent property analysts LonRes.
Additionally, the rental market continues to be affected by low supply and escalating rents, with more affordable properties renting quickly, while those priced at £1,000 or more per week are experiencing a slowdown.
LonRes’ data revealed that average achieved sale prices across Prime London dropped by 0.6% in May compared to the same period last year.
There were also 26.7% fewer transactions, reflecting a mere 6.0% decline from the pre-pandemic average of 2017-19.
Looking ahead, both new instructions and properties under offer decreased on an annual basis, suggesting future activity is likely to be subdued.
The report highlighted an upward trend at the higher end of the sales market. Despite an annual fall, agreed sales of properties valued at over £5m in May were 13.0% above their 2017-19 average.
New instructions in this market rose by a notable 38.6% compared to a month earlier, while properties in this price band under offer also remained relatively high.
However, the Prime London lettings market saw lower levels of activity due to a limited supply, which supported continued rental growth.
New lets in May were down 25.4% on an annual basis, and new instructions were 6.3% lower. Despite this, annual rental growth increased slightly to 8.5% in May.
Nick Gregori, head of research at LonRes, said: “We’re hearing from agents across Prime London that some markets are a little slow and that it can be tricky to get deals over the line. Where vendors and buyers are motivated and pragmatic, agreement can be found and sales are still happening, just at a slower pace than the past couple of years.”
He also mentioned emerging signs of uncertainty even in the £5m+ market, which had previously appeared less susceptible to the general lack of confidence in the wider economy and housing market.
In terms of the lettings market, Gregori highlighted the continued rental growth due to strong demand against a shrinking supply.
He noted, however, signs of slight weakening at higher price points, with May data revealing increases in the time to let in the £1,000+ per week market.
