The number of domestic buyers in prime central London has grown this year but the overall volume of sales has plummeted and it could be three years before a recovery, Strutt & Parker has warned.
Using LonRes figures, the agent says there was a 4.6% uplift in UK domestic market buyers in prime central London year-on-year.
However, the number of properties sold over the same period in the prime central London area fell 46.7% to 384, according to Strutt & Parker’s London Residential Quarterly report.
The agent is predicting that prices in prime central London will fall by 10% in 2016 and in a ‘best case scenario’ will be flat in 2017 and 2018 before returning to growth of 8% in 2019.
In a ‘worst case scenario’ prices would continue falling by 5% in 2017 and 2018 before growing 4% from 2019, according to forecasts from the agent.
Despite the Brexit vote and the continuing uncertainty, Strutt & Parker says London still retains its attraction to overseas buyers with a slight increase of buyers coming from both western Europe and Asia relative to the second quarter of 2016.
Charlie Willis, head of London Residential at Strutt & Parker, said: “The low volume of transactions is indicative of a market where only properties at realistic prices with motivated sellers are completing.
“We have seen a noticeable increase in viewing from committed buyers, throughout later September and October, and this has led to an uptick in transaction volumes, particularly where sellers have been realistic and adjusted asking prices according to market sentiment.
“The fall in sterling against certain currencies following the Brexit vote, particularly the dollar and the Swiss franc, has definitely been a major contributing factor to the increase in buyers we have seen from Europe and Asia since June. For overseas buyers, this currency play instantly wipes out the formerly prohibitive cost of 15% Stamp Duty on the most expensive properties.”
Strutt & Parker is forecasting lettings growth to be flat in 2016 and 2017 before 2.5% growth from 2018.
On the lettings side, the number of lets fell year-on-year by 36% to 3,695, but Strutt & Parker’s own figures show there has been an increase in higher value rents in prime central London.
Kate Eales, national head of lettings at Strutt & Parker, said: “Despite volumes of lettings transactions being down year on year in PCL, we have seen tenancy length increase, as well as a surge of demand in ‘super prime’ with transactions up 50% year-on-year in properties over £8,000 per week.”