Sales values and activity across prime London saw a decline in September, compared to the same period last year, according to independent property analysts LonRes.
There was a noted decrease in the average sold prices, marking a fall of 3.1% on an annual basis, the most significant decline since May 2021. Compared to the same month a year earlier, there was a 24.3% drop in transactions.
Despite an emerging recovery in the lettings supply, rental growth gained momentum. In September, the annual growth rate for rents rose to 9.3%, pushing the values to a notable 31.1% higher than the pre-pandemic average between 2017 and 2019.
However, there is a silver lining. Though the number of new sales instructions fell by 2.0% compared to September 2022, the number of properties going under offer experienced a sharper decline of 27.4%.
Moreover, the premium segment of the market, represented by properties priced at £5m and above, witnessed a more moderate impact. Sales in this segment were 13.9% lower than the previous year.
Yet, there was a slight 1.0% increase in instructions year-on-year, with no change in the number of properties going under offer.
The prime lettings landscape in London reflected high rental values coupled with a lower activity rate. LonRes’s data for September pointed to a 7.7% yearly drop in the number of lets agreed upon.
However, there was a 20.0% surge in new instructions, suggesting that activity remains around half of pre-pandemic levels.
This uptick in activity might be slightly deceptive, as rental demand is so robust that a significant portion of properties are being let without listing, thus remaining unrecorded in the data.
As the autumn selling season commenced, September saw a flurry of activity, although it remained subdued compared to previous years.
New sales instructions for the month were down by 2.0% compared to the same period in 2022, but up by 11.5% against the pre-pandemic September average.
Transaction levels and values both faced pressure from a dip in buyer demand, marking 24.3% fewer sales than the previous year and a 3.1% yearly drop in achieved prices.
Various factors could be contributing to this subdued market. Recent data from Transport for London indicates that travel on the Underground and buses has plateaued at less than 80% of their 2019 average.
This suggests a potential shift in employment patterns in the city following the pandemic.
Moreover, the absence of international buyers might be affecting the sales market. Despite UK flight arrivals reverting to their 2019 levels in the summer of 2022, the demand from overseas buyers might be dampened by broader issues like economic uncertainties and the perception of a less friendly tax and business environment.
Nick Gregori, head of research at LonRes, said: “After a quiet summer we heard positive signs from some agents at the start of September.
“They reported interest from potential buyers picking up, in the form of increased numbers of enquiries and viewings.
“Our data isn’t yet registering that this has translated into agreed sales, which remain a little low for the time of year compared to the stronger markets of the past two years.
“But relative to pre-2020 trends, the start of the autumn selling season has essentially been a typical one.
“However, there is a risk that negative economic news in the UK and the escalating conflict in Israel and Palestine could further weaken buyer sentiment.”
