Activity levels at the very top of the London property market have stabilised after a tumultuous few years, the latest analysis reveals.
Sales in the super prime market with homes valued at £10 million plus have been underpinned in many cases by the release of pent-up demand, says the report from international real estate firm Knight Frank.
The figures show that the number of new prospective super prime buyers registering in the first three months of 2018 was 7% higher than last year.
And, although the number of transactions in the year to March was 9% lower than over the previous 12 months, this is an improvement compared to annual falls of more than 20% registered throughout 2016 and the first half of 2017.
The steepest price decline since the peak of the market in prime central London in August 2015 has been in Chelsea where a 15.5% fall took place between then and March 2018.
However, buyers have responded to the decline and the value of super prime sales has risen as a result while the effects of a weaker pound also continue to drive sales, alongside the continued appeal of London.
The report points out that US dollar denominated buyers would have benefitted from an effective 11% discount at the end of March compared to the period before the European Union referendum
‘Though London has had a tough time recently, it is seeing renewed vigour. The effective discount provided by a weaker pound has certainly helped some buyers seeking value. There is a continued focus on safe haven investments for the long term with increasing focus on income generation and longer-term returns,’ said Paddy Dring, head of global prime sales at Knight Frank.
‘Although political risk remains with us, economic fundamentals underpinning the market remain strong, with interest rates at an all-time low and global economic growth improving,’ he added.
Family houses in the Kensington and Chelsea are in relatively strong demand at the start of 2018 among needs driven buyers, according to Thomas van Straubenzee, head of Knight Frank’s private office .
‘While international investors are proceeding with more caution, British families committed to London are more comfortable buying given that pricing has largely adjusted for stamp duty. It means areas like Notting Hill have done very well at the start of 2018,’ he pointed out.
But some buyers remain hesitant. ‘There has been a definite uptick in enquiries from prospective buyers, which is feeding through into sales. However, those buyers making commitments have either been in the market for a while or have a pressing social or personal need to move,’ said Daniel Daggers, a prime central London partner with Knight Frank.
‘So there is a ticking clock for many of them which, together with the price declines and favourable currency movement, means they are now deciding to act. Buyers are less location specific and new focal points include Fitzrovia and W2,’ he added.