New instructions up but values and transactions remain subdued.While new instructions were up in February, sales values and activity slipped back. Fall-throughs and withdrawals remain low, but the number of price reductions is growing. In a longer-term context, activity is in-line or slightly ahead of pre-pandemic levels. Transaction volumes in February were 2.7% lower than a year earlier, 0.3% below the 2017-2019 February average. Under offer numbers had been looking more positive but in February they fell by 7.6% on an annual basis, indicating sales activity may remain low in the short term. Values, based on average achieved £ per sq ft figures, fell by 7.8% on an annual basis, leaving them 1.1% below where they were 10 years ago.
There are signs of green shoots in the prime London housing market. January saw a rise in the number of properties going under offer and an increase in the number of new sales instructions coming to the market. Fall-throughs and withdrawals have also fallen. However, this data which is forward looking, is yet to translate into actual sales. As a result, values in January continued to fall slightly month-on-month, with the annual change in achieved prices across prime London falling to -7.1%, the biggest drop in almost five years.
While 2023 was a mixed year for the prime London property market, it could be argued that we start January 2024 in a slightly better place than the January of 12 months ago. While there are some new downsides to consider, chiefly an escalating conflict in the Middle East and a General Election campaign looming, the good news is that inflation has fallen and interest rates are starting to follow, providing a boost to sentiment. However, we ended Q4 2023 on a subdued note with activity levels across both sales and lettings down on Q4 2022.
Prime London prices and transactions fall in November but remain only slightly below long term average…The prime London sales market recorded a relatively subdued month in November, continuing a trend seen throughout 2023. Average achieved prices were slightly lower than a month earlier and the annual rate of change was -4.1%, the largest fall since August 2019. However, the longer-term context shows that values are broadly unchanged from a decade ago and in fact are now 1.6% higher than five years ago and 4.1% higher than 10 years ago. Transaction levels were also down in November (by 32.1%) on an annual basis, despite a high number of properties going under offer in October. However, we have not seen a rise in fall throughs which suggests deals are just taking longer to proceed. On the supply side, November saw 5.0% more new sales instructions compared to the same month last year which is good news for those looking to buy. It’s worth noting that while November’s sales activity may look low compared to last year, looking further back suggests that 2023 will only be slightly below the long-term average. Our records show that for transactions recorded in January to November each year, 2023 is within 10% of the average from 2005 to 2022.
October saw another relatively subdued performance for the prime London sales market. Average achieved prices fell by 3.3% compared to a year earlier. While this is the largest annual fall since May 2021, values overall have been broadly unchanged with little significant movement in either direction for almost a decade. Looking back at average October prices over this period, they have stayed in a range of between £1,250 to £1,350 per sq ft in each year from 2014 through to 2023 and currently sit very close to the 10-year average.
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