Prime London prices and transactions fall in November but remain only slightly below long term average…The prime London sales market recorded a relatively subdued month in November, continuing a trend seen throughout 2023. Average achieved prices were slightly lower than a month earlier and the annual rate of change was -4.1%, the largest fall since August 2019. However, the longer-term context shows that values are broadly unchanged from a decade ago and in fact are now 1.6% higher than five years ago and 4.1% higher than 10 years ago. Transaction levels were also down in November (by 32.1%) on an annual basis, despite a high number of properties going under offer in October. However, we have not seen a rise in fall throughs which suggests deals are just taking longer to proceed. On the supply side, November saw 5.0% more new sales instructions compared to the same month last year which is good news for those looking to buy. It’s worth noting that while November’s sales activity may look low compared to last year, looking further back suggests that 2023 will only be slightly below the long-term average. Our records show that for transactions recorded in January to November each year, 2023 is within 10% of the average from 2005 to 2022.
October saw another relatively subdued performance for the prime London sales market. Average achieved prices fell by 3.3% compared to a year earlier. While this is the largest annual fall since May 2021, values overall have been broadly unchanged with little significant movement in either direction for almost a decade. Looking back at average October prices over this period, they have stayed in a range of between £1,250 to £1,350 per sq ft in each year from 2014 through to 2023 and currently sit very close to the 10-year average.
The third quarter of 2023 saw the market trends from the early part of the year continue. For the prime London sales market that meant weak demand feeding into falls in both values and transaction levels. On the lettings side, supply continued its slow recovery and demand remained strong for lower priced homes. It is sales activity that continues to be harder hit than values. Transaction volumes have fallen significantly compared to the stronger sales market seen in 2021 and 2022 but remain in line or even slightly ahead of where they were pre-pandemic. Despite ongoing economic uncertainty, further price falls are likely to be limited by the level of equity in the market and the low growth seen over the past decade. The market for homes at £5m and above has also seen falls in activity from recent highs.
August continued the theme of 2023 so far for the prime London sales market – quiet. Values remained broadly stable, with average achieved prices falling by 1.0% compared with a year earlier. Prime central London bucked the wider trend by recording annual growth of 2.3%, bouncing back from last month. New instructions in August were 16.5% lower than the same month last year and 11.5% lower than the prepandemic August average (2017-2019). Transactions fared similarly with a 28.5% annual fall in August, 9.2% below the 2017-19 average. For the whole of 2023 so far there have been almost 24% fewer sales recorded. The number of properties going under offer also fell in August. There was an annual fall of 17.1%, with the total for the year to date 12.6% below last year. However, the number of under offers for the year to date is 18.9% above the 2017-19 average, so the wider context suggests that there is still a decent level of demand in the market. While there are few positive signs in the above analysis, looking at the data for the whole summer suggests that the lack of activity is to be expected and the results for 2023 are nothing out of the ordinary compared to previous years. Sales volumes for the months of June, July and August 2023 combined are a little lower than the 2017-2019 average and both new instructions and under offers are above that baseline.
The positive signs emerging in June didn’t last long, with the prime London sales market slowing down again in July. Average achieved prices fell by 2.6% compared with a year earlier. All three sub-markets across prime London recorded falling sale prices in July, with prime central London’s 3.4% drop the largest. While the market is often quieter as the summer holidays start, last month’s activity was low compared to the typical July. Transactions in July were 26.1% lower than the same month last year, and 9.1% lower than the prepandemic July average, i.e. from 2017 to 2019. New instructions in July were 12.4% lower than a year earlier, but for the calendar year to date they were up slightly, by 2.6%. The July figure was also 6.4% above the 2017-19 average.
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