House sales in the prime central London market rose by 21% in the second quarter (Q2) of 2015 compared to Q1, but are down 32% annually, according to the latest quarterly report.
Prices have fallen slightly, by 0.6% over Q2 compared with the previous quarter, found recent prime central London data from real estate firm JLL.
Prime Central London Sales Up but Down 32% Annually
However, the report says that the sales market remains resilient and although cautious, buyer demand has recovered since the drop before the general election in May.
Stamp Duty reform is still impacting the market though, and buyers and vendors are assessing the effect of these changes, especially in the £5m-£10m price range.
Meanwhile, the sub-£2m market has been the least affected by the election, Stamp Duty and mansion tax threats, with prices up 2.2% annually.
Sales Director at W.A.Ellis estate agents, part of JLL, Richard Barber, says: “While transaction levels remain low, particularly in the £3m-£7m sector of the prime central London market, there is undoubtedly a noticeable flight to quality.
“Affordability issues, in the face of increased Stamp Duty costs, have affected purchaser confidence, but high prices per square foot are still being achieved for the most exclusive properties.”1
The prime central London lettings market has experienced an increase in demand from private renters and supply levels have remained high throughout Q2, claims the report.
It adds that London’s improved economic conditions are causing growth in rent prices, up 1% compared to Q1 and 1.5% on last year.
Lettings transactions have risen by 4% overall in Q2, as election uncertainty caused some buyers to rent instead. Year-on-year, transactions are down 8%.
Letting Director and Head of Agency at W.A.Ellis, Lucy Morton, explains: “There has been an increase in rental stock available, mainly as a result of landlords awaiting the outcome of the general election and deciding now to let instead of sell, and these higher stock levels have meant that competition between landlords has increased, with properties in optimal condition letting first.
“This has also meant that the market has become very price sensitive with more people turning to the rental sector after being unable to secure finance or find the right property to buy.”1
The report concludes that the future of the prime central sales market is looking stable due to the majority Government and low interest rates. Prices are expected to rise by 1.5% during the rest of the year.
The lettings market is due to see rental values increase by around 3%, with more people preferring the flexibility of renting.