The average price of sold homes in Prime London dropped by 7.8% annually in February, taking them back to early 2014 levels, research by property analysts LonRes has found.
Transactions in February were slightly lower than a year ago, by 2.7%, but in general activity is holding up better than values.
Indeed, there were only 0.3% fewer sales in February than the 2017-2019 (pre-pandemic) February.
Nick Gregori, head of research, LonRes said: “Values fell again in February… this takes prices back to early 2014 levels.
“Other metrics such as discounts, reductions and time on the market are all broadly in line with long-term trends, suggesting that the market is operating ‘normally’.
“The Budget on 6 March saw some relatively minor tweaks to property taxation – on holiday lets, multiple dwellings relief, and capital gains – plus the abolition of ‘non-dom’ status.
“This came too late to impact our February data so we will have to wait and see if there is any immediate impact, but it seems unlikely that the sum total of the changes will shift the dial for either supply or demand in the prime London property market.”
Big ticket deals
The top end of the market is the best performing sales market sector, with £5m+ activity well above long-term trend levels.
Sales in February were 4.2% higher than a year earlier and 25% ahead of the 2017-2019 (pre-pandemic) February average.
New instructions in this market rose by 8.4% annually.
There is a growing volume of available homes for sale in this market, with 26% more £5m+ properties for sale at the end of February than a year ago.
Gregori added: “The most positive sales story remains the £5m+ market, where activity is still significantly ahead of the typical levels recorded from 2017-2019.
“February saw 4.2% more transactions than the same month last year but new instructions are also increasing, and at a faster rate. 8.4% more sales listings in February than last year on top of the big jump in January means that available stock in this market has grown by 26% over the past 12 months.”
Prime London lettings market showing signs of stability
February saw significant improvements in activity across the prime London lettings market, and annual rental growth also increased slightly after four months of falls.
Rental growth rose slightly in February, to 3.4%, taking values to 26.7% above their pre-pandemic average.
The number of newly agreed lets in February increased by 14.2% compared to a year earlier but was 48.7% below 2017-2019. New instructions rose last month by 17.6% on an annual basis, but the figure remained 42.0% below the average 2017-2019 February level.
Gregori said: “The lettings market has been supply-constrained for a long time, but so far this year there are emerging signs of new instructions picking up.
“Stock on the market has grown by almost 50% compared to a year ago. Annual rental growth appears to have stabilised at around 3.5% after a few months of falls.
“And our discount and price reduction metrics are moving back towards what would be considered more ‘normal’ levels.”