Home sales in London’s prime neighbourhoods slowed in August and values dropped to pre-pandemic levels amid a selling season unsettled by political uncertainties, according to a report from LonRes released.
There was an even sharper decrease in the number of new leases for properties across the capital’s prime neighbourhoods, including Chelsea, Kensington, Mayfair and Knightsbridge—though rent prices held up better, according to the report.
The number of prime sales in August dropped 7.5% compared with last year, and fell 3.3% relative to the pre-pandemic average (from 2017 to 2019). Inventory, on the other hand, climbed 11.9% in August relative to last year, fuelled by an 8.1% monthly increase in new listings, though total listings remained below the pre-pandemic average.
The rebalancing of supply and demand translated to lower pricing, with values down 4.2% in August, back to where they were pre-2020. On the plus side, the August decline was less than the previous two months.
“Even by usual summer holiday standards August was a quiet month for the prime London sales market,” Nick Gregori, head of research at LonRes, said in a prepared statement. “Autumn is typically a more active time of year and we expect to see the usual jump in instructions in September, but the key question is whether demand will pick up too.”
Sales were down 47.2% compared to last August, with a 42.5% influx of new listings leading to a 30.1% increase in total £5 million-plus listings on the market compared to last year, indicating quite an imbalance between supply and demand. That said, signed contracts were up 68.8% from last year, which suggests the slowdown in sales could be a holdover from political uncertainty earlier in the year and may be transitory.
“The negative sentiment is amplified at the top end of the market, with more specific budget fears in the form of ‘non-dom’ and other tax changes,” Gregori said. “Agents have described a mixed picture, with some reporting strong appetite from overseas buyers while others suggest some current international residents are looking to exit.”
On the rental side, transactions dropped off as well, though an inventory shortage continued to put pressure on prices. There were 14.5% fewer leases signed in August compared to last year, and almost 60% fewer than in pre-pandemic years. New listings were down monthly but up 6% since last August, while rents climbed 2.4%.
