November LonRes - a good end to a busy year, but tricky to predict 2022
The November LonRes report for prime sales and lettings is out and unsurprisingly the positive sales market continues, but with an ongoing disparity between the upper and lower ends of the prime market. The Lack of stock in the lettings market is driving up prices and causing a headache for both tenants and agents in the run up to the festive season.
Prime Sales Market
LonRes reports another busy month for the top end of the prime market with sales of properties over £2 million up 5% on 2020 and 29% higher than 2019. The lower end of the market however registered 35% fewer sales under £2 million compared with 2020, but this follows a busy first half of the year.
Prices are rising too. Houses sold in the last three months achieved 7.0% more than in the same period last year. Flats, which sold less well over the course of the pandemic, also rose in value, albeit by a more modest 2.8%.
LonRes Highlights
The sales market across prime London has outperformed the previous two years
59% more sales at under £2 million between January and October 2021 compared with 2020
The number of sales in the first 10 months of 2021 was 8% higher than the whole of 2019 and 23% up on 2020
Sales below £2 million are already 25% higher than the full 12 months of 2020 with 16% more sales at £2 million plus
Achieved prices have risen across prime London over the past three months. Flats up 2.8% on the same period a year ago and houses recording 7.0% annual growth
Overall, prices rose by 4.6%
"In terms of transactional value and volume, we have had our best year to date," says Simon Rose. "This quarter is currently quieter than the previous, which is to be expected, with buyers taking stock of what they have seen and sellers considering their next steps. That said, there are always some good deals to be made around Yuletide, before the market goes quiet over the festive holidays. But we expect the market to resurface with renewed vigour in the New Year, as people use holiday time to start their searches. Big decisions are often made over the festive season."
Prime Lettings Market
Rent's up, stock's down: For lettings, scarcity of stock continues to support growth in rents, but is making it difficult for both tenants and agents to source suitable properties as demand outstrips supply by some way.
New tenants in October paid, on average, 12.4% more than in October last year. This means rents are now higher than the previous peak in February 2020.
LonRes Highlights
Voids are at their lowest level since 2017, averaging 43 days in October 2021
Existing tenants are staying put with agents reporting further increases in the number renewing their contracts
Rental stock down 72% on October 2020 and 52% lower than October 2019
Lack of stock and poor 2020 trading has led to double digit annual growth in achieved rents
In October, rents rose 12.4% across prime areas of London and are now 0.6% higher than they were prior to the first lockdown when rents previously peaked in February 2020
Prime central London recorded a 14.0% annual increase, with rents 14.5% higher in prime London and 8.7% up in prime fringe
Average voids of 43 days in October 2021, down from 56 days in September and a high of 84 days in January 2021
If you're a prospective tenant looking to move before Christmas, you're in for a difficult time as market dynamics are unforgiving right now...
"It's a frustrating market as new listings are few and far between" says Zoë Rose. "We're starting to see price alignment (reductions) of aggressively priced properties that didn’t let in the busy spell. But a continued stock drought is something we need to adjust to - if you need to move, don't dither and ensure all decision makers view together so that an offer can be made on the spot."