We are delighted to introduce ‘House Edge’, our new market quarterly report, designed in conjunction with Dataloft. Below we breakdown our key findings from our Q2 report. Despite the UK economic turbulence, Prime London is back in business. Property sales continue to edge upwards and London rental values rise steeply as city life returns.
The Prime London property market is continuing to prove itself as a safe haven for investment, weathering the storms of both Brexit and the Covid-19 pandemic. As many buyers across the rest of the UK struggle to adjust to the economic backdrop and cost-of-living squeeze, higher-value areas of London – where buyers seek to purchase properties without a mortgage – are in their best shape since 2014.
Over 24% of properties sold at or above the asking price in Q2 2022, representing the highest market peak in 8 years. Meanwhile, just 6.2% of properties sold in the last quarter saw a price reduction on the initial asking price. This is all despite recent political and economic uncertainty, which is being felt by many households across the UK. And while the Sterling has consistently underperformed against other global currencies since the Brexit vote back in 2016, it has only helped Prime London’s property market to perform well.
Overseas investors look at the relative economic and social stability of the capital and see it as an attractive market for their investments. This, along with its supply/demand balance and strategic position between the time zones of Asia and America, continues to cement London as one of the most coveted cities to own property.
In the last quarter, houses in London valued at over £5 million were up by +13% versus the pre-pandemic average (2015-2019). Meanwhile, the average price per square foot achieved on Prime London house sales increased to 5.4% year-on-year, with the average property in the £1 million+ market being £1,842 per sq ft.
Along with property sales, the London rental market is also rising steeply despite a fall in recent years as the Covid-19 pandemic pressed pause on the city. During the final quarter of 2021, rental values recovered back to their pre-pandemic rates before surpassing them in 2022. The average rent of a Prime London property is now 4.9% higher than it was at the end of last year.
In Q2 2022, only 15% of properties let in Prime London were less than £2,000 per month compared to one in three a year ago. Properties across all price bands are renting quickly, taking an average of 45 days, which is almost 3 weeks faster than the average rental time at the end of 2021.
One of the inevitable consequences of post-pandemic life has been the difficulty to restore the London office market back to what it used to be. Many firms have reshaped their way of working with the digital world enabling many individuals to continue to work from home. But this has not been enough to trouble the Prime London property market.
The office market may never recover to pre-pandemic levels but Central London with its extraordinary offering of shops, art, culture, food, fashion, music, nightlife, architecture, parks, theatres and rich history continues to be a draw for so many property buyers and investors. It’s also no doubt why London has been named the ‘World’s Best City’ for the sixth year in succession while maintaining its position as the second most important Global Financial Centre after New York in the Z/Yen Global Financial Centres Index.
Among the coveted neighbourhoods of Prime Central London are St John’s Wood, Notting Hill, Kensington, Regent’s Park, Bayswater and Knightsbridge with their beautiful architecture and leafy streets attracting affluent clientele from all over the world. In the last year, sales in these areas were close to 50% higher than the pre-pandemic averages.
When it comes to the nature of these properties, it’s clear that one of the lingering effects of the pandemic is a continued interest in ‘space’. House sales are some 8% higher than the pre-pandemic average, while apartment sales are down by 2.7%. But it’s not all bad news for apartments. As city life returns, the market is showing signs of rebalancing with 78% of all prime London sales in 2022 being apartments.
Whether you’re looking to buy or rent a house or apartment in Prime London, you’re in good company. There’s also no doubt that making a purchase in one of the capital’s coveted neighbourhoods continues to prove a very worthwhile investment.