James Gow
Senior Director, Head of London Residential Sales and Head of Kensington Sales
James Gow, Head of London Sales, shares his outlook for the residential property market in Prime Central London in the next few months
We gather the summer has ended with a bang in prime central London. What has been happening?
We’ve just advised on the sale of a substantial family house at Palace Gardens Terrace in London’s Kensington to a cash buyer for just shy of £10m – and it really captures the shift we’ve seen emerge over the summer months.
First, it generated high levels of interest from determined buyers. This was a marked change as the market over £5m – and the house market in particular – had been pretty subdued at the start of the year. The sale also completed at the end of the summer, which is normally a quiet time of the year in the housing market.
This is just one of a flurry of sales in our London offices which have all followed a similar trajectory. So much so that the total value of property sold via our six London offices between June and August jumped 66% compared with the previous three months. Sitting behind this bounce in activity is a clear uptick in sales at the higher end of the market, much of which is made up of family houses.
So there's a clear buyer appetite for houses. Do tell us more…
Many buyers in prime central London have been sitting on the sidelines – for up two years. So we’ve known there was pent up demand. The question has been, when will they actively return to the market? This finally happened in the summer, and these buyers are coming back to the market with vigour. Almost all of our offices have seen a substantial jump on enquires from buyers.
Take Chelsea and Islington - in July the numbers of buyers registering with us surged by 56% and 79% respectively compared with June. This month-on-month figure more than tripled in Hampstead.
The number of accepted offers is also trending upwards. In South Kensington and Earls Court in July, the level increased fourfold against the previous month.
What is more, offers are translating into sales too. In Islington, the number of exchanges completed in July tripled against June.
Canny sellers are spotting this window of opportunity. This is particularly the case in Sloane Street and Chelsea, where the level of sales instructions we received in July increased more than doubled respectively compared with June.
This momentum is setting the scene for a busy autumn. We launched a series of family houses in the first week of September alone, with price tags of up to £12.95m.
What’s fuelling this momentum?
There’s a number of factors at play. The economic picture has improved. The Bank of England’s cut in the base rate in August from 5.25% to 5% has buoyed sentiment and eased pressure on budgets. And let’s not forget that the rate remains low compared with previous decades. Mortgages are getting cheaper too.
Meanwhile inflation has dropped from the 11.1% peak in October 2022. And, in a recent vote of confidence, the London Stock Exchange (LSE) became Europe's largest stock market. It comes nearly two years after it lost the title to Paris.
The new Labour government is also settling in and bringing a sense of certainty. There’s speculation that the chancellor could unveil tax rises in the upcoming Autumn Budget on 30 October and buyers are of course paying attention. It’s worth bearing in mind however that while the UK’s tax burden may be high, it is competitive on the global stage, as a recent report from the BBC shows.
So the prime central London market is ‘safe as houses’, then?
Absolutely. London continues to shine as a leading global city. Its history, culture, and education make it a highly sought-after city to call ‘home’. This was underlined recently when London was crowned the most popular city in the world for the ninth year running. This accolade is based on quality of life, work and travel, according to Resonance’s World’s Best Cities report, quoted in Forbes.
London is also a safe, secure and stable place to invest. Unrest in other parts of the world can drive buyers to the UK, and the capital in particular.
Prime central London has been shaped by a range of factors during the 25-odd years that I’ve been advising sellers in this housing market, including the Great Financial Crisis, stamp duty reform, and Covid-19. If you look at long-term house price growth in prime central London on a graph, the line is a smooth upward one.
There is a limited supply of homes in the exclusive pockets of the city and buyers are prepared to pay to live there. This scarcity factor makes the market remarkably resilient. As a result, we expect house prices in prime central London to increase between 10% and 15% to 2028.