The statistics in Strutt & Parker’s latest Prime Central London (PCL) report, which looks back over Q3 2015, hide an increasingly polarised market where growth is still being seen in the lower end, but high priced transactions continue to be very limited in volume.
The statistics in Strutt & Parker’s latest Prime Central London (PCL) report, which looks back over Q3 2015, hide an increasingly polarised market where growth is still being seen in the lower end, but high priced transactions continue to be very limited in volume.
Stephanie McMahon, Head of Research at Strutt & Parker, said: “Whilst some commentators are predicting falls in values across the market, we believe these positions are being disproportionately impacted by the £5m+ segment of the PCL market, which has experienced particularly low activity levels in 2015.”
A total of 720 properties were sold during Q3 2015, which was an overall decrease of just 3.7% compared to the same period last year. Compared to the five year quarterly average, the total volume of transactions were 17.0% down in Q3 2015. Flats remain the preferred purchase in PCL, with nearly 57.0% of buyers in Q3 2015 wishing to purchase one.
The downturn in price growth in 2015 has reduced the number of these properties entering the market as discretionary vendors are willing to wait for prices to recover. This is matched by increased buyer caution as SDLT reforms, an accumulation of recent tax revisions aimed at high net worth property owners, and a strong pound, have discouraged foreign investors from entering the UK market. Overall, this has resulted in investors taking longer to make decisions and considering alternatives. These trends look set to continue for the remainder of 2015 with the ultra-prime segment likely to show zero and in some cases negative growth. However, sellers placing properties on the market that are sensibly priced and good quality will continue to do well.
Charlie Willis, Head of London Residential at Strutt & Parker said: “Since the summer break, increasing activity in PCL shows that buyers and tenants are making the most of relative aligning of asking prices. There is no doubt that confidence is on the up and the considerable tax changes of the last few years are now being regarded as the new norm.”
There were 3,936 property lets agreed in PCL during the third quarter of 2015, which was just 1.9% below the five year quarterly average.
Zoë Rose, Head of London Lettings at Strutt & Parker, said: “PCL Lettings has experienced a slowdown, particularly affecting the three and four bedroom mid-market. That said, demand for one and two bed properties from young professionals remains robust and uncompromising. Properties that are well presented continue to rent successfully.”
Stephanie McMahon, Head of Research at Strutt & Parker concludes: “The prime London markets have slowed over the past 12 months with the spate of intervention from the government, combined with a strong pound. The coming year brings further uncertainty with the Mayoral election and lobbying around Brexit. It is likely that PCL will remain quietly positive whilst Greater London displays more growth in 2016.”