LonRes has declared the prime London sales market to be “subdued” entering the second half of 2023.
The data consultancy says that in June the prime London sales market record a mixed picture and whilst there was slight growth in terms of values of homes traded, the absolute number of transactions slipped back.
Achieved prices were 0.6 per cent higher than June last year, the first rise since November 2022, while transactions were 11.8 per cent lower.
However LonRes insists that leading indicators of sales activity shows cause for cautious optimism.
The number of properties under offer in June was more than 6.0 per cent higher than a year earlier and new instructions are also growing steadily, up by 4.6 per cent annually; and while sales activity in the £5m+ market fell compared to June last year - by 14 per cent - they remain high in a wider context.
Over the first half of the year, transaction volumes are down around 20 per cent across all areas of prime London compared to a year earlier. This annual change is broadly the same pattern across all price points.
The longer-term comparison is very different, with significantly higher activity in the £5m+ market, where there were 17.3 per cent more sales compared to the 2017 to 2019 H1 average.
Nick Gregori, head of research at LonRes, says: “At the halfway point of 2023 the prime London sales market remains mixed. Sales activity is down on last year but broadly in line with typical pre-pandemic years. Buyers are still out there and they are keeping the market moving and underpinning values – at least for now.
“The £5m+ market in particular, has seen a record high June for new instructions and while sales have not quite kept pace with supply, under offers have picked up (by 32% on June last year) which suggests sales coming down the line.
“It’s difficult to ignore the turmoil in the mortgage market, which is set against an uncertain economic backdrop. Both factors are undoubtedly impacting sentiment among buyers and sellers across the wider UK housing market. While prime London is driven largely by discretionary buyers and in many ways operates quite differently from the mainstream markets, we are hearing anecdotal reports of buyers expressing nervousness around the political situation and expectations of a change in government.
“Combined with the economic outlook and forecasts of price falls, it is no surprise that some people are in no rush to buy this year.”
On the lettings side, June saw little change in the prime London market, with rents continuing to grow and new supply thin on the ground. Rental growth has been strongest for smaller properties as working patterns shift and affordability begins to bite, the consultancy suggests.