Prime London property update - Winter 21/22 and how to play this market
The Winter 21/22 LonRes report was released last week and for the prime London sales market, sales were pretty impressive.
On the other side of the coin, the prime London lettings market was harder hit than ever before for the most part of the year, only redeeming itself in the final quarter where lack of properties fuelled high rent levels.
Download the full LonRes report
In 2021 buyers bought bigger and spent more
Buyer spend in 2021 was higher than in any other year since LonRes records began, with a record-breaking record £11.6 billion spent on prime London
property. Prime Central London was the strongest performer, up 6.7% on Q4 2020.
While we know this wasn't all domestic buyers, and much of the property ownership is outside of the UK, this still represents a great year for London real estate.
The top end leads the charge
As with many post-crisis periods, there was notable price growth across London Prime Central London (PCL) leading the charge, with the top end having busiest fourth quarter of the year.
Over Q4 2021 the number of homes sold for £5 million or more was up 15% on 2020 and 47% on the previous five-year average.
Activity below £2 million slowed in Q4, with 23% fewer sales at under £1 million and 19% fewer between £1 million and £2 million compared with 2020.
Overall prices rose by 7.2%.
Our advice on the current sales market: proceed with caution!
While agents reported a very strong year in 2021 there is some trepidation as to whether these record prices are sustainable in the medium to long term.
Even though stock levels remain low, there isn’t the same beat to the market, and it will be interesting to see how Q1-2 of 2022 performs.
We are however cautiously optimistic about 2022. There is a great market out there for buyers and sellers who can keep their feet on the ground!
An unprecedented year for lettings
At the start of 2021, stock levels were running 83% higher than at the beginning of 2020 and rents had fallen by 16% compared with pre-pandemic levels.
But few predicted the sudden flip as just eight months later, the lettings market had done a full 180!
With many tenants choosing to renew, the most sought-after properties were being let even before reaching the open market and some landlords choosing to sell, the market swung from being tenant driven to landlord driven, seemingly overnight.
Non-existent lettings stock continues to cause problems
As the number of tenants continue to outstrip stock by some way, prime London lettings have continued to rise with double-digit annual growth and achieved rents higher than they were at the previous peak in Q1 2020.
Just 12% of properties let in Q4 2021 had a reduction in asking price before finding a tenant.
How to play the current rentals market
In these times, the retained search agent is key in helping tenants source that elusive rental.
Look out for properties only listed with one agent to limit down potential gazumping - exclusive listings are worth their weight in gold.
This market can bring out the very best and the very worst in terms of operating tactics within our industry unfortunately so it’s important to find agents whom you trust and who work with integrity.
Please feel free to contact us with any questions you might have on the current sales or rentals market.
For sales and acquisitions, contact Simon or Tom on sales@roseandpartners.co.uk; or for rentals enquiries, contact Zoe onzrose@roseandpartners.co.uk.
Speak soon,
Simon, Tom and Zoë