October Newsletter
October is proving to be another challenging month for sellers, with prices last month dropping by 3.1% in prime postcodes when comparing to a year ago, however it’s important to analyse these numbers in a wider context. Last year was a record year, so although the market has softened since then, it is still performing better than it was pre covid as this update will demonstrate. Landlords are still enjoying a very strong market, with the yearly rental growth reaching 9.3% in September.
The sales market
There has been low levels of activity in the prime market, which is resulting in the softening of sales numbers. September saw transaction levels falling by a quarter compared September last year. As mentioned, 2022 was a record for prime London market, so one must look at the numbers with a wider scope. When comparing to the average achieved prices between 2017 and 2019, prices are now one percent higher. According to the FT, when comparing the number of properties sold over £5 million to pre-pandemic levels, the first 9 months of the year to September was 67% higher.
Nick Gregori, head of research at Lonres, was quoted in The Times saying, “our view is that further significant falls are unlikely. Prime London values are well insulated by high levels of equity in the market and limited numbers of ‘forced’ sellers. There has also been relatively low price growth over the last decade, which suggests there’s less froth to come off this market than others.”
Where does this leave buyers today? Lucian Cook, head of research at Savills, summarised it well in another article in The Times for those aiming to time a buy within 5 percent of the bottom of the market, “if they look back over a 10, 15, or 20-year period of ownership, whether they catch it on the way down or the way up makes little difference. If the right property does come alone when prices haven’t quite hit the bottom, it’s often a great time to buy as you can do so with less competition – even if It requires a leap of faith”.
The rental market
It’s been another strong month for the rental market. According to the Office for National Statistics, rental prices have increased by 6.2% in the year to September. According to Foxtons, there are an average of 19 tenants per new property. There are some signs of the market balancing, with 10% more homes available than this time last year, however there are no signs of prices reducing in the near future.
If you are interested in purchasing a property in London, please email iyad@iyadgrahne.com for a free consultation.