Review of the PCL market for 2022 and our predictions for 2023

As we approach the end of the year, and head into the festive lull, it’s a good time to reflect on the ups and downs of the PCL property market in 2022, and look into our agent’s crystal ball for 2023…

After the frenetic post-COVID activity we experienced in 2021, 2022 has seen a quietening down of the market, with a more calm and cautious approach to sales across all areas.

While instructions and transactions have been good, there has been less pace this year, and more of a sense of quiet optimism, slight relief that the world is still turning, and adjustment of both expectations and market, with the latter end of the year slowing down quite considerably and financial/political uncertainty playing a significant part in keeping the market in check.

According to the latest LonRes report, sales held ﬁrm during October, 11.6% higher than last year and 12.1% higher than the pre-pandemic average. However, fall-throughs were 80% higher than their pre-pandemic average (2017-19).

Under oﬀers are always a leading indicator for sales activity, and they fell sharply in October (down 20.3% compared to last year). This was the ﬁrst time the under oﬀer data has been below its 2017-19 average since June 2020.

Sales hold firm, but caution, market forces and increase in interest rates have got the better of some buyers with fall-throughs on the increase.

Under oﬀers have fallen in most areas, with the highest falls in the more mortgage-dependent prime fringe areas. According to LonRes, under offers on houses are down 37% and ﬂats down 18% from last year.

Prime Central London is unsurprisingly the steadiest areas in this regard, with houses in prime central London showing a 38% increase, although this could also be down to the fact that USD buyers have taken the opportunity to purchase quickly as the GBP took a battering. This flurry has most likely quietened down a little now as the GBP rallies slightly.

A cautionary look towards 2023

As we look at the current market and on towards 2023, there is a little more trepidation than at the beginning of the year. We are currently living in unprecedented times with geopolitics, climate, inflation and recession on the back of Covid creating a perfect storm of uncertainty for the future with particular focus on interest rates, taxes, exchange rates and the impact of the cost of living crisis across the globe.

Just when we thought we'd come out of Covid and could look forward, things have taken a turn yet again with less confidence in the market going forward into 2023 than we had this time last year.

Caution continues in earnest with the number of properties going under offer has fallen by 9.2% compared to October last year according to LonRes.

In terms of pricing levels, the average achieved prices per square have continued to see a small increase, but less than 1% on prices at the same time last year. Properties are still in very short supply, but this no longer translates to a seller’s market.

Prime Central London is as ever a lot more stable than outlying areas. The countryside and semi-rural areas are those that carry the most risk of serious price falls, with property prices having been inflated over recent years due to “Covid migration" from the cities.

What are the risks in buying in the current market…?

Our own Tom Tangney, who has specialised in buying and selling in PCL for decades, recently filmed an online episode of “Word from the Street” with London Property”, a panel of industry experts, which gives a good overview of what to watch out for in the current climate:

Taxes are an ongoing discussion and no-one really knows what they are going to do to address the economy at this point, so buyers and sellers will have to be patient and/or committed.

Our advice to our clients, as ever, is simply to be realistic and sensible. Interest rates are on the up, so be careful you’re not over-stretching yourself.
Purchase with negative price adjustments in mind - negotiation is key at the moment.
Buyers are in a strong position, but you should only pursue a property where the vendor is serious about selling.
If you’re a vendor, be serious about selling and be realistic in your asking price. Be absolutely committed and have your property ready to go. Some of the strongest demand out there is for properties that are ready to occupy with a quick turnaround.
Exchange rates have been a factor in some sales, although this is more important for the larger houses. Cash buyers or those with very small mortgages have been and continue to be the most active, and despite a little recovery of the GBP, foreign investors are still getting the best deals, but it will be interesting to see how this is balanced with any potential tax on foreign investment...

The year according to R&P

As far as R&P is concerned, well, we’ve had quite an eventful year ourselves, but we are very happy to have celebrated five years of the business with a number if fantastic transactions this year, lots of instructions and continued development of existing long-term relationships. This is our kind of market in many ways: We see ourselves as constant, quiet achievers. We don’t just rely on buoyant markets to be successful and are seasoned experts in operating in market downturns, due to our realistic approach at all times.

Off-market sales are very popular at the moment and that's where our connection come to the fore.

We have always prided ourselves in being successful at selling properties before they have been formally advertised, through our connections and a highly-targeted and personal marketing approach. The preference for off-market activity will definitely continue into 2023.

If you're thinking about buying or selling in Prime Central London, South West London or Berkshire, please don't hesitate to give us a call for an initial chat.

In the meantime, we wish you all a very happy festive season with your families and look forward to tackling 2023 head on with continued enthusiasm, because there is always a market in PCL!