Measures of sales activity across prime London remained mixed in July, says LonRes, the property data consultancy.
New instructions and under offers increased but transaction volumes fell. Average achieved prices were broadly unchanged on an annual basis.
There were 31.7% fewer transactions in July than the same month a year ago, and 7.8% fewer than the 2017-2019 (pre-pandemic average) July average. Given under offers picked up in June and recorded another strong month in July – up by 17.5% on an annual basis – this suggests deals may either be taking a long time to conclude or are falling through in greater numbers than usual.
The time from under offer to exchange has not increased over the past few months, but clearly this does not yet account for current deals that haven’t reached exchange. Higher numbers of fall throughs were recorded in July – 19.9% more than a year earlier and 48.0% more compared to the 2017-2019 (pre-pandemic average) July average. These figures add weight to the idea of a market with low confidence amongst both buyers and sellers.
On the supply side, new instructions were 22.4% higher than the same month last year and 9.4% higher than the 2017-2019 July average. For those homes already on the market, the number of price reductions continued to rise in July – by around 60% compared to both last July and the 2017-2019 July average. Stock on the market at the end of July was 15.8% higher than last year and 31.5% above the level five years earlier (July 2020) – although it’s worth mentioning that the 2020 baseline is volatile due to the impact of lockdown on the market.
As our pre-pandemic, 2017-19 baseline moves further into the past, we’ve considered whether it is the correct longer-term benchmark for a “normal”, stable market. We’ve therefore looked at an extended long-term baseline this month, comparing current figures to the 10-year average from 2015 to 2024, to give some additional context to the current state of the market. Those 10 years contained some good and bad periods for prime London residential but that is the nature of any cyclical market.
Based on rolling 12-month totals for sales and new instructions across prime London, the market is currently relatively close to that long-term average, with sales over the past year 3.1% below the 2015-2024 average and new instructions 15.6% above. Fall throughs are 20.0% above the long-term average, having been at an elevated level since late 2022.
Average values across prime London fell by 0.4% on an annual basis in July and were 0.8% below their pre-pandemic (2017 to 2019) average level. This continues a trend of relatively small price movements over the past 18 months to two years. The average discount from initial asking price increased to 9.3% in July compared to 8.2% in June. This is the highest figure this year, reversing six months of discounts steadily reducing.
The recent trends in the £5m+ market continued, with reasonable demand and high levels of supply and price reductions. There were 13.3% fewer £5m+ transactions in July than the same month a year ago, but 11.4% higher than the 2017-2019 (pre-pandemic average) July average. New £5m+ instructions were 28.2% higher than the same month last year and 89.6% higher than the 2017-2019 July average.
Stock levels at the top end of the market reflect this imbalance, with the number of £5m+ homes close to the record high set in June. At the end of July this figure was 23.4% higher than last year and 87.1% above the level five years earlier (July 2020). While supply has grown faster than demand at all price points over the past three years, the scale of growth has been highest for £5m+ properties.
Rental availability across prime London increased to a four-year high as new instructions grew in July. The number of agreed lets fell on an annual basis in July, while rental growth slowed slightly.
Annual rental growth in July was 3.3%, down from a revised 5.4% in June and back in line with the average over the past 18 months of 3%. Rents across prime London are now 34.8% above their 2017-2019 (pre-pandemic) average.
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