Summary
Decisive election result and greater Brexit certainty unplug demand for London’s luxury property.
3 min read
Our latest report on luxury property in London finds prices rising fast towards the end of last year as the UK election result and move towards Brexit certainty boosted buyer confidence.
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Chapter 01
Overview
Luxury property prices across the city rose 5.3% over 2019, but 4.8% of that came in the final quarter alone. Demand is also on the up, with 10.1% more places sold in the last quarter of 2019 than the last three months of 2018. As Brexit-related worries eased, overseas buyers will have been motivated to move quickly while sterling remained under pressure.
Meanwhile, the number of high-end houses displaying ‘For Sale’ signs is extremely low and continues to drop, falling -8.9% in the last quarter of 2019. There are now -11.8% fewer prime properties for sale on the open market compared to a year ago. New listings also fell by -16.5% in the last three months of last year, and have more than halved since the market high back in the summer of 2014.
Despite all this, it remains a buyers’ market, with prices still lagging the 2014 peak by -11.1%, and properties in some pockets of London, such as Hammersmith & Chiswick, selling for -19% less than they were then.
Katherine O’Shea, from the Coutts Real Estate Investment Service, says competition among buyers is likely to increase this year, putting further pressure on prices.
“Historically, the number of properties put up for sale has usually improved in the first quarter of the year, so we would expect more homes to come on to the market over the coming months,” she says. “But the number of buyers is also likely to rise as the political uncertainty of the last few years continues to unwind. This increased demand could push prices higher.”
She adds: “The numbers for the last quarter of 2019 could be showing us a distinct change of mood in the luxury property market. It’s been subdued and filled with uncertainty for some time, but we’re now seeing the potential for brighter times ahead.”
Property purchases may cost more for overseas buyers
Alex Lyneel, Home Buying Strategy Manager at Coutts, says one thing overseas buyers should be aware of is the Stamp Duty Land Tax (SDLT) reform expected as part of the UK government’s next budget on 11 March.
He explains, “One of the expected changes to SDLT is the introduction of a new 3% surcharge for overseas buyers of residential properties.
“No formal announcement is expected before budget day but, as we’ve seen in the past, the changes could be introduced overnight. This means they might apply to all transactions which exchange contracts after midnight on 11 March.
“Prospective buyers could therefore look to push through their purchases now to avoid paying extra. That’s what we’ve seen happen with previous stamp duty hikes over the last few years.”
Sellers less likely to budge on prices
Fewer luxury properties are being sold at a discount too, as sellers aware of the lack of choice stick to their guns on asking price.
Only 41.9% of prime London property sold at a discount in the last quarter of 2019. This is the lowest figure we’ve seen since we started researching the market in 2016.
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Central london bounces back
Prices in traditional prime central locations such as Mayfair & St James’s, Knightsbridge & Belgravia, Kensington, Notting Hill & Holland Park, and Chelsea have all risen in 2019.
Sales activity in these markets has increased significantly compared to a year ago. For example, prime property transactions in Knightsbridge & Belgravia are up 64% compared to a year ago. Knightsbridge and Belgravia also had the most super prime sales in Q4 – properties worth £10 million or more – closely followed by Mayfair & St James’s.
North London sellers hold firm on prices
The current trend towards fewer properties being sold at a discount is perhaps most keenly felt in North London.
In Hampstead & Highgate, only 26.3% of properties are selling for less than the asking price, while in King’s Cross & Islington it’s 32.6%.
And when buyers north of the river are getting a discount, it’s low compared to other areas, -6.1% on average in King’s Cross & Islington and -7.6% in Hampstead & Highgate, compared to -10.2% on average across prime London.
New Instructions needed
The number of new luxury properties put on the market in the last three months of 2019 fell in nearly all the areas covered by our research. The largest fall of -41.3% was seen in St John’s Wood, Regent’s Park & Primrose Hill, closely followed by Fulham & Earl’s Court with a drop of -37%.
Comparing new instructions with the height of the market in Q2 2014, the results are even more extreme. All markets are down, and most neighbourhoods have seen new instructions fall by over 50%.
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Hampstead & Highgate
New instructions in this area fell over -32% annually, and the number of prime sales shrank by -2.1% annually.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <£1m 909 0.3% 165 47 -6.3% 44 12.8% £1m - £10m 1,050 3.4% 157 50 -7.6% 46 -2.1% >£10m - - - - - - - Source: LonRes King's Cross & Islington
Prices in this area are close to record levels, just 1.3% below the peak. Discounts averaged at 6.1%, the lowest figure seen across all the areas covered by our index.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 765 -6.7 157 90 -5.2% 32 -11.1% £1m - £10m 1,020 -0.2 139 40 -6.1% 19 - >10m - - - - - - - Source: LonRes Marylebone, Fitzrovia & Soho
This area saw the highest drop in prices across all areas covered by the CLPPI with a -6.9% reduction in prices over the last year.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 1,2396 13.1% 156 35 -6.8 25 -21.9% £1m - £10m 1,620 -6.9% 156 42 -10.7% 52 -10.6% >10m - - 226 1 - 2 - Source: LonRes Mayfair & St James's
Prices increased by a modest 2% over the last 12 months, but they remain 10.8% below the asking price on average.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 1,870 4.9% 137 4 -6.3% 3 -25.0% £1m - £10m 2,176 2.0% 207 10 -16.7% 18 38.5% >10m - - 57 5 - 3 -25.0% Source: LonRes Knightsbridge & Belgravia
Both sales and prices in this area show positive momentum – up 46% and 5.2% respectively compared to the year before.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 1,159 -11.6% 233 10 -13.0% 5 66.7% £1m - £10m 2,011 5.2% 152 28 -10.0% 41 64.0% >10m 3,826 28.0% 208 1 -25.9% 4 33.0% Source: LonRes Pimlico, Westminster & Victoria
Prime property is selling fastest in this area, within 127 days on average.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 1,041 2.0% 146 37 -7.6% 37 23.3% £1m - £10m 1,239 4.3% 127 22 -13.3% 27 - >10m - - - - - - - Source: LonRes Wimbledon, Richmond, Putney & Barnes
Prices here increased 3.7% over last year and are now just 7.8% below the peak.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 717 3.1% 152 81 -7.0% 63 -26.7% £1m - £10m 784 3.7% 140 18 -8.3% 27 -10.0% >10m - - - - - - - Source: LonRes Battersea, Clapham and Wandsworth
Prime property prices in this area increased 6.3% year-on-year, the highest price hike seen across our index.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 749 -0.4% 155 180 -6.3% 136 -12.8% £1m - £10m 842 6.3% 168 38 -8.6% 43 -8.5% >10m - - - - - - - Source: LonRes Fulham & Earl's Court
Prime property prices fell -5.9% over the last year and are now 17.6% below the peak.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 900 6.1% 150 71 -6.3% 80 -7.0% £1m - £10m 1,014 -5.9% 146 43 -8.5% 62 6.9% >10m - - - - - - - Source: LonRes Chelsea
Prime sales in this area increased by 51.6% annually while new instructions saw a 7.8% increase compared to the previous year.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volume Annual change in quarterly sales volume <1m 1,168 -7.6% 155 37 -9.4% 48 33.3% £1m - £10m 1,641 4.2% 143 54 -10.6% 94 51.6% >10m 2,729 119.2% 103 - -11.7% 2 0% Source: LonRes Hammersmith & Chiswick
Over 55% of prime properties here are selling at a discount, with buyers on average getting 8.8% off the asking price.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 772 0.7% 163 89 -5.7% 41 -25.5% £1m - £10m 818 -4.3% 153 49 -8.8% 29 26.0% >10m - - - - - - - Source: LonRes South Kensington
Prime properties here are now taking 14.3% less time to sell compared to last year, with only a third of properties sold at a discount.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 1,383 22.8% 142 12 -11.2% 9 50.0% £1m - £10m, 1,675 -1.2% 161 29 -11.9% 48 50.0% >10m 2,206 -12.7% - - -19.9
1 -50.0% Source: LonRes Kensington, Notting Hill & Holland Park
Both sales and prices in this area increased moderately - up 4.8% and 2.5% respectively compared to the year before.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 1,022 -2.9% 142 68 -6.6% 59 18% £1m - £10m 1,481 2.5% 143 72 -9.5% 87 4.8% >10m 2,583 -8.5% - - -19.3% 2 -60% Source: LonRes Bayswater & Maida Vale
Sales volumnes fell -7.1% annually and are down -30.7% compared to recent peak levels.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 949 -8.7% 174 71 -7.0% 66 10.0% £1m - £10m 1,245 -1.0% 159 50 -12.4% 52 -7.1% >10m - - - - - - - Source: LonRes St John's Wood, Regent's Park & Primrose Hill
The number of prime sales in this area reduced by -12.5% compared to last year - the highest reduction seen across all areas covered by our index.
Q4 2019 Sold property price band Quarterly average sales £/SQ FT Annual change in price Time on market before sale (days) Number of properties under offer this quarter Average discount for sold stock Quarterly sales volumes Annual change in quarterly sales volumes <1m 925 -0.5% 165 43 -5.7% 34 -33.3% £1m - £10m 1,201 -4.9% 169 24 -11.7% 42 -12.5% >10m 1,615 -39.6% 162 - -9.1% 2 -50.0% Source: LonRes
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