Prime London property market sees price drop and low activity in October 2023

The prime London housing market in October 2023 experienced a decline in average sold prices and transaction volumes, as reported by independent property analysts LonRes.

Average achieved prices fell by 3.3% compared to the previous year, the most significant decrease since May 2021.

Transaction volumes also saw a reduction, with a 29.5% decrease in comparison to October 2022 and an 8.2% drop from the pre-pandemic October average.

Despite the decrease in sales, the number of properties going under offer in October increased by 9.7% year-on-year. However, new sales instructions declined by 7.2%.

The volume of stock available for sale by the end of October was only slightly lower than the previous year, down by 1.5%.

The high-end market segment, particularly properties valued over £5m, observed a 31.6% decrease in sales from the previous year, but new instructions increased by 20.4%. These changes suggest a return to more normal activity levels in this segment.

In the lettings market, the pace of annual rental growth in prime London slowed to 8.1% in October, yet it continues to rise following significant previous growth, with values now 33.0% above the pre-pandemic average.

Despite the increase in lettings supply, rental demand remains high, but a significant proportion of properties are being let without listing, leading to lower recorded activity levels.

Nick Gregori, head of research at LonRes, said: “The prime London sales market hasn’t changed much since last year. Values are slightly lower, and activity has fallen back to typical longer-term trends.

“However, there has been a shift in the £5m+ market, moving towards more mainstream prime market trends.

“Buyers and sellers appear to be waiting for positive news to take action. On the supply side, sellers seem more motivated than usual, with more price reductions and a slower rate of properties being withdrawn from the market.”

Gregori further noted the challenges in analysing the prime London lettings market due to limited property listings and strong tenant demand. He added: “With supply, there is little evidence of any mass sell-off from landlords, but a lack of new entrants is reducing the stock of typical buy-to-let properties, making it difficult for the market to return to 2019 levels of available rental homes, particularly for more affordably priced properties.”