Thoughts from our Property Experts

YOUhome's September's London property market insights look more closely at the autumn season when market activity traditionally picks up. After a glorious sunny summer with some notable sales and under offers, what should you expect moving forwards?

Whilst we await the August data from trusted industry sources to confirm our own findings, the July published data shows many guiding principles. Familiar patterns are repeating.

 

In July London’s prime property sales market activity echoed the first half of the year. 

The key measures remained mixed: lower sales transaction volumes, healthy ‘under offer’ numbers, with very high home supply and continuing property price reductions. Buyers currently have plenty of choice!

YOUhome along with several other London agents reported visible sales activity which should reassure the market. 

 

However, looking at the overall picture, higher numbers of fall throughs were recorded in July – 19.9% more than a year earlier and 48.0% more compared to the 2017-2019 (pre-pandemic average) July average. These figures add weight to the idea of a market with lower confidence amongst both buyers and sellers.

 

Average prices achieved fell by 0.4% on an annual basis in July, illustrating a relatively steady market. This is reassuring.

 

Average values across prime London fell by 0.4% on an annual basis in July and were 0.8%

below their pre-pandemic (2017 to 2019) average level. This continues a trend of relatively

small downward price movements over the past 18 months to two years. The average discount from initial asking price increased to 9.3% in July compared to 8.2% in June. This is the highest figure this year, reversing six months of discounts steadily reducing previously.

 

The £5 million plus market continues to experience challenges. Transactions in this market in July were 13.3% lower than the same month last year. New instructions in this market increased by 28.2% over the same period, with stock on the market also continuing to rise. The number of £5m+ homes available for sale across prime London has grown by 23.4% over the 12 months to the end of July. 

(Source: *Lonres)

Kensington, Notting Hill & Holland Park Property Sales   (W8, W11, W14)

 

Looking at sales figures for Q3 (available July - August ytd only) the Land Registry records show:

1 x terraced property sold £3.087million

1 x semi-detached property sold £4.275 million 

21 x flats sold; average price £847,063

We also note the tremendous sale of a Holland Park villa listed at £41 million, in Q2 this year!

Overall, these sales numbers are not high. 

There are serious buyers in the market and established agents continue to secure high value sales results albeit in small numbers.

What about the autumn Budget?

Top of mind for anyone planning a sale or purchase of prime property this autumn is the forthcoming Budget. Rachel Reeves and her £50B black hole hang ominously over the property sector in London. Budget speculation does create uncertainty.

 

There is much speculation as to how and when homeowners will be the target of increased taxes. Let’s look at the considerations currently being muted:

- A new tax on properties over £500,000 replacing stamp duty

- The introduction of capital gains tax on properties over £1.5m

- A mansion tax as a capital gains charge on the sale of all homes over £1.5m
  (this is not currently paid on principle homes) 

- A new form of stamp duty on properties sold over £500k. Rates to be advised!

- Local council tax systems revised, and a new property tax linked to the value of the home.

 

I am sure homeowners will weigh up their ability to sell should any of these new conditions become reality. Property sellers and in particular long-standing owners who now wish to downsize will feel the impact for sure. It is exactly these punitive taxes that will stop older homeowners / downsizers from moving. 

 

Second guessing exactly what policies will be introduced is going to slow our sales market – a reaction we do not need. Will clients wait for a new government to save the day before they move? This will not help the market either. 

 

But let us not be too hasty. The future looks unsettled, but the wheels of business are turning currently. Price continues to be key. Turn-key properties, proximity to the best schools and transport, London’s alluring lifestyle and culture are still key drivers of sales, please do not forget this!

 

Banks have started to increase mortgage rates this autumn in small steps, in reaction to the sentiment that inflation will force the Bank of England to hold rates higher for longer. (Source: Financial Times)

 

Concern continues to grow over the state of Britain’s public finances. Over the summer UK inflation increased to 3.8% (x 2 bank target) Rising interest rates does not help the market, even though we see a larger number of cash buyers in W8, W11 and W14.

September’s traditional market rally may not see the level of momentum we hope for but market sales activity continues. Given the government’s current tumultuous standing, let’s hope there will be better news for London and prime property in November.  

 

Let me leave you with this overriding thought: business sectors like tech and AI, defence and infrastructure are strategic drivers of our economy currently. With the year end in sight and city bonuses in discussion, London prime property is still an attractive proposition here in the city.

About Laurence Lai, COO, YOUhome Property Experts
Laurence Lai is Chief Operating Officer and Sales Director at YOUhome Property Experts, London. He is a well-respected and well-known property industry professional, having spent over 30 years selling prime London homes in central London’s golden postcodes including Chelsea, Belgravia, Mayfair, Kensington, Holland Park and Notting Hill. Across his career, Laurence has transacted over 1,000 luxury home sales in Prime Central London.