Housing market activity slowed in the final quarter of 2022 and this has carried through into the first month of 2023. The economic and political turmoil created by the Truss minibudget has eased but interest rates are much higher than this time last year and buyer demand has subsequently fallen back.
2022 was a mixed year for the prime London residential market. The first three quarters saw the continuation of the post-pandemic boom with rising prices and robust levels of activity. However, the political turmoil and resulting financial market stress put a dampener on the market in the final quarter of the year. Despite the turmoil, prices rose to just below their previous peak during 2022 and the top-end of the market boomed while demand for houses fell slightly relative to flats.
The prime London market has not been immune to the wider challenges facing the housing market. The impact of higher interest rates and political and economic uncertainty can even be seen in the prime London market despite it being less dependent on mortgages.
The last week of September marked a turning point for the prime London housing market. The market was not immune from the political and economic turmoil arising from the minibudget. As we noted last month, sales fell through, properties were withdrawn from the market, and price reductions spiked. The caution has continued into October with some mixed signals.
The events of the last two weeks have added an unwelcome degree of uncertainty to the UK’s economy and housing markets. Prime London has not been immune to that uncertainty with evidence of more cautious buyers. Sales falling through, properties withdrawn from the market, and price reductions all spiked in the week following the mini budget. But the fallout has also created an opportunity for some, with new instructions rising and the number of properties under offer both higher than the same period last year. Meanwhile, the weakness of the pound may encourage some international buyers to take advantage, potentially offsetting some of the challenges facing the more mortgage dependent markets across the rest of the UK.
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