Autumn 2022 prime property market update - it's time to get real
As we march through autumn, this time is usually initially quite busy, but then slowing down the nearer we get towards Christmas. However, the year to date has taught us to expect the unexpected, because our traditionally quiet summer months of July and August were busier than ever!
The political situation in the UK has been rather wobbly of late, and the pound is taking a bit of a battering against the dollar at the moment, but this has meant that while British or UK-based buyers are feeling a little cautious, USD buyers are able to take advantage of the opportunity to buy while sterling is low. Someone always wins in every negative situation after all!
The latest LonRes report highlights some positives in the market, but there is a whiff of caution on the autumn breeze.
PRIME SALES
Prices are still rising across prime London at an annual rate of 4.2% in August. This left prices 3.1% higher than their average prior to the pandemic (2017 - 2019).
This is great news for sellers, but our advice as ever is to be realistic and not set your hopes too high. Overpriced properties are starting to stick around for longer again. Buyers will be cautious about overextending themselves with interest rates on the rise as well as utilities and general cost of living.
LonRes reported that while transaction numbers are robust, with the number of sales 11.6% higher than their pre-pandemic average (2017 - 2019), there are signs of caution with an increase in the number of transactions falling through over the summer (33% higher in August 2022 than the same month last year).
It’s hard to say exactly why this is, but current economic situation is likely a key factor…
As far as new instructions are concerned, we have been pleasantly surprised by the number of properties that are coming onto the market right now. This is always a very positive indicator for the market in general.
LonRes reports an increase in instructions of by 5.5% on pre-pandemic figures, but these instructions vary across the Prime London market and houses are still in greater supply than flats:
The number of houses listed for sale was 7% higher than 2018 levels, while the number of flats was 3% below.
The top-end of the market (£5m+) has seen the biggest increase in new instructions, up 30% on 2018 levels while properties priced between £500k and £1m are 5% below.
It is a similar pattern with Prime London areas. The highest value market – Prime Central – has seen new instructions 8.5% higher than 2018 levels and Prime Inner are 1.7% higher while Prime Fringe are 8.8% below.
PRIME RENTALS
It is still extremely tough in there rentals market, at every level. The rental market is still suffering from a lack of stock and low activity, with LonRes reporting that new lets in August were 43.8% down on last year, while new instructions were 21.7% lower.
The lack of rental stock has led to rapidly rising rents, up 24% over the last 12 months, which some might say is unrealistic and unsustainable. At some point, the market will correct.
Rents are rising fastest for studios (26.0%) though this partly reflects their fall in rents last year. Houses are recording the slowest growth, though still up 11.5% on the year and 14.6% higher than pre-pandemic.
OUR ADVICE FOR CLIENTS
If you’re a buyer in Prime Central London, then you have more choice at the moment, but don’t forget its not about buying the cheapest property but the right one, which is still likely to be expensive…the best normally are!
If you’re a vendor, with more choice out there for buyers due to increase in instructions, and with the increase in interest rates and a weak GBP, you’re going to need to be competitive and realistic in what’s achievable. If you need to sell quickly, don’t be greedy; it’s a buyer’s market right now...