prime central London property market has been experiencing a slowdown for last two years
Strutt & Parker says that this now could be the bottom of the market for the area. The statistics are cause for concern for those who believe that housing market trends always ripple out from London, although much less so for those who believe that the most expensive parts of the capital have become increasingly detached from the mainstream housing market.
Figures from LonRes show that in the second quarter of this year, there were 286 recorded sales in total in prime central London compared with 347 in the last quarter of 2008.
The figures relate to the postcodes in which Strutt & Parker operates and are for second-hand stock only.
In the peaks of Q2 2006, 1,148 such properties were recorded as sold and in Q4 2013, 1,027 were recorded as sold.
Stephanie McMahon, head of research at Strutt & Parker, said: “The prime central London property market has been experiencing a slowdown for two years now.
“This is thanks to an ever-growing number of headwinds including the threat of mansion tax back in 2014, the devolution vote in Scotland, two batches of significant Stamp Duty changes, the General Election in 2015 and most recently Brexit.
“Transactions in prime central London now appear to be at an even lower level than they were at the last trough of the global credit crunch at the end of 2008.
“It is worth noting that in turbulent times the PCL property market becomes increasingly opaque with more properties being sold off-market, which does cause a lack of transparency – but nevertheless these recorded figures from LonRes are significant.
“It will be interesting to see whether the current currency play could be enough to spur activity for the market to make some form of recovery in the second two quarters of this year.
“The fall in sterling post-EU referendum has helped to create further value for buyers seeking to get into the London market.
“Although the declines do not match those of 2008 – when the pound declined significantly having at one point (May 2007) reached 1:2 against the US dollar – they do open up obvious buying opportunities.
“If momentum does return, we could be at the bottom of the market now.”
Charlie Willis, head of London residential at Strutt & Parker, said: “I believe activity levels are starting to pick up again after the run-up to the Brexit vote which caused a kind of paralysis in the prime central London market.
“Now that we have a result on the vote, a layer of uncertainty has been removed. We also have a new Prime Minister and a revitalised cabinet, and as a result our usual political stability will begin to return. Global perceptions of the UK and particularly London as a long-term safe haven should begin to return as a consequence.”
“We have already seen the devaluation of sterling make property look very attractive to committed overseas investors and expats, effectively providing an automatic discount off a purchase price for them, and I think this – coupled with a domestic market where there is still often a personal need for people to move home – is where our interest will come from over the next few months.”