The steady recovery in prime central London property sales continued through the summer as asking price reductions continued to stimulate demand, the latest analysis suggests.
It shows that as demand and activity steadily rise, price declines continue to show evidence of bottoming out. Prices fell 0.2% in August and annual growth was trimmed to 5.4%, which was the lowest rate since November 2016.
The number of residential exchanges was 5% higher in the first seven months of 2017 compared to the same period in 2016, according to the prime central London sales index from Knight Frank.
While there has been a modest decline in sales volumes since April due to political uncertainty surrounding the general election and Brexit talks, volumes were 21% higher in June and July compared to 2016, the research shows.
‘This reflects the underlying trend of a market that has stabilised in 2017, though it is worth noting that the process has not taken place in a uniform way across all markets and buyer sensitivity to price remains high,’ said Tom Bill, head of London residential research at Knight Frank.
An analysis of growth by price band reveals that higher value properties outperformed lower value properties for the sixth consecutive month as the market adapts to higher rates of stamp duty. Prices between £5 million and £10 million fell 3.7% in the year to August 2017 compared to the overall market decline of 5.4%.
Furthermore, Knight Frank demand indicators reveal an improvement in forward looking data, with an 8% rise in the number of new prospective buyers registering between January and August 2017 compared to the same period last year. Viewing levels were up by 14% over the same period.
The supply of new stock over the first eight months of the year was 17% lower than 2016. The decline is largely the result of a surge last year caused by a stamp duty hike in April 2016. The overall level of stock was 9% higher at the end of August than the same point last year.
‘The impact of political events and stamp duty changes means a comparison of market performance in 2017 with previous years is not straightforward. However, an improvement on last year is clearly discernible although any recovery remains relatively shallow for now and in line with our forecast for a broadly flat price movement this year,’ Bill added.