"Generally, home hunters are city workers who are back in their offices most of the week now and want to be living in London rather than worrying about the hassle of commuting from the countryside"
All of their new enquiries were from buyers seeking an apartment, implying the flat market is having a resurgence following the pandemic’s ‘race for space.’ Whilst over half were from cash buyers, who are recognising their attraction to vendors who are prioritising those not relying on large mortgages.
The latest search briefs range from a one-bed apartment at £750,000 to £4.5 million penthouses. Kensington, Notting Hill & Holland Park are the most popular with home buyers, whilst buy-to-let investors are prioritising South Kensington and Bayswater.
According to London Central Portfolio’s latest ‘LCP Market Review’ which analyses data from Bricks & Logic, average house prices in Prime Central London remained level over the last twelve months staying at £3,833,559, whilst average flat values rose 0.3% to £1,123,498. Monthly, they fell -0.2% and -0.1% respectively, and quarterly they decreased -0.8% and -0.7%, most likely linked to increased inflation and interest rates impacting buyer confidence in the market. However, the data suggests flat prices are now holding their value more than houses.
Breaking the data down into key Prime Central London villages, Pimlico recorded the largest house price growth, rising +1.0% to £2,260,418 over the last twelve months. This was followed by St James & Westminster where house prices rose +0.1% to £3,295,574. Meanwhile, flat prices increased in just
Pimlico by +0.1% to £674,651. In terms of a decrease, house prices fell the most in Mayfair by -2.4%, whilst flat prices reduced the most in Notting Hill & Holland Park by -0.9%.
For buyers, particularly apartment hunters, the local market still presents an excellent opportunity to acquire prime real estate at substantial discounts compared to historic peak values. The buying agency’s report found that all Prime Central London’s key villages are still below their historic peak in 2015. The largest savings for houses are in Mayfair standing 8.1% below 2015 levels, whilst Marylebone has the biggest discount on flats which are nearly 13% lower.
Andrew Weir, CEO of London Central Portfolio, commented: “We are certainly seeing signs of the local market heating up again with UK-based buyers following the pandemic and the mini-budget. Generally, home hunters are city workers who are back in their offices most of the week now and want to be living in London rather than worrying about the hassle of commuting from the countryside, especially with recent public transport disruptions.
"Now we’re into 2023, people have also realised that the economy hasn’t come crashing down as initially feared following the mini-budget. Many people are taking a view that inflation may have peaked and are taking confidence from early signs that mortgage rates are stabilising and even declining for those with large equity in their homes. This is all helping to bring a degree of momentum back into the local property market.
“Unsurprisingly, Prime Central London prices have fallen since their peak in 2015 due to the increase in property taxes, Brexit disruptions and slower recovery than expected due to the impact of the pandemic affecting demand, and more recently, the mini-budget. However, as both domestic and international investors start to return, this increased demand combined with a shortage of stock is slowly starting to put upwards pressure on property prices.
"The nature of PCL means that only a few transactions will significantly impact the market. Wealthy buyers who are not constrained by the increase in interest rates are wanting to take advantage of the current below-historic peak pricing before values start to rise again. Others are seeing now as an opportunity to buy as there is a little less competition prior to the busy spring market. Apartments are particularly in favour as buyers seek to secure them before more foreign investors return, especially those from Asia Pacific as China opens its borders again.
"Furthermore, with vendors prioritising cash buyers over those who are relying on large mortgages, we have noticed that the market is moving from ‘who is making the highest offer’ to ‘who is most readily proceedable’. This presents another good opportunity for buyers to negotiate because vendors like the fact that cash buyers can quicken the sales process substantially whilst reducing the risk of a deal falling through.”