Buyers fight for the best on offer
The biggest challenge for buyers now is lack of stock. The number of prime properties on sale on the open market is down by 12.5% on last year, leaving buyers with far fewer properties to choose from. New instructions are also down, 20.5% lower than the same period last year and 35.2% lower than the last peak in 2014. Fewer properties on offer means that competition can be intense among buyers for desirable properties when they come up, and as a consequence gazumping is on the rise. Prime property transactions across London take 169 days on average to conclude – from listing to exchange – leaving plenty of time for gazumping tactics.
Commenting on the latest analysis Alex Midha, Senior Private Banker in Coutts’ European team, said, “Managing the transaction is very important to ensure all parties are speaking to each other regularly and that the vendor and vendor’s agent are confident that the buyer is credible and proceedable.”
Discounts falling, but still high
The more competitive environment for buyers is also driving discount rates down. The average discount in Q2 has fallen to 11.1%, compared to 12.7% in Q1 and the lowest figure for the last three quarters. However, listing prices tend to lag the market, and this can make discount data hard to read. Some sales represent properties that may have been on the market for quite some time, with an initial asking price reflecting pricing trends in late 2017 or early 2018.
Prices have fallen substantially over the last 18 months, and so discounts are possibly less representative of hard bargaining on the part of buyers, and more an acknowledgement by sellers of the current market reality. The risk of down-valuations remains a challenge for buyers, too, and in a market where house prices have been falling, property valuations coming in lower-than-expected are not uncommon.
Demand for family homes sustains outer-prime areas
Regardless of whatever else happens in the property market, family homes are always in demand. Accordingly, prices in outer-prime areas that are dominated by domestic buyers – such as Wimbledon and Hampstead – have continued to stand up. Less than a third of homes in these areas are selling at a discount to asking price, compared to 47% on average across prime London, and the average discount is two or three percent lower than across prime London.
Elsewhere, prices remain a long way off the height of the market. For example, Knightsbridge & Belgravia, South Kensington, and Hammersmith & Chiswick are all over 20% cheaper than at the peak of 2014. Despite low prices, lack of stock continues to be a challenge for buyers. New instructions are down significantly across all areas covered by our index compared to a year ago, with falls ranging from -23% to -70%. In all but one of the areas covered by the index, the number of prime properties available for sale on the open market has come down compared to a year ago.
Other key findings for specific postcodes include:
- Battersea, Clapham & Wandsworth: New listings have halved since the start of 2015.
- Bayswater & Maida Vale: Prices increased by 1.1% over the last 12 months but are still 12.1% below the peak of 2014.
- Chelsea: Transaction volumes are roughly half of what there were in 2013.
- Fulham & Earl’s Court: Prices have increased 1.5% over the last 12 months but are still 18.9% below the peak.
- Marylebone, Fitzrovia & Soho: Transaction volumes have fallen, albeit not as severely as in other prime areas, and are down 9.4% compared to a year ago.
- Hammersmith & Chiswick: 27.3% of property here is sold at a discount to asking price compared to 47.1% across prime London markets.
- Hampstead & Highgate: A third of properties selling at a discount to the asking price, with buyers on average getting 8.9% off.
- Kensington, Notting Hill & Holland Park: There are 25.2% fewer properties available for sale compared to last year and new listings are over 40% lower than they were in 2014.
- King’s Cross & Islington: Prime property prices increased 2.8% over the last 12 months and are now just 2.7% below the peak.
- Knightsbridge & Belgravia: Transaction volumes are roughly half what they were in 2013 and prices are 21.1% below the peak.
- Mayfair & St James’: Mayfair & St James’s saw the single highest annual price increase, up 4.1% but new instructions have halved compared to the peak of 2014.
- Pimlico, Westminster & Victoria: The number of prime properties available for sale is 23% lower than two years ago and new listings are 20% lower than a year ago.
- South Kensington: Prices fell 7.7% over the last 12 months and are now 22% below peak values.
- St Johns Wood, Regents Park & Primrose Hill: 76.5% of properties here are sold at a discount to the asking price, with buyers on average getting 17% off.
- Wimbledon, Richmond, Putney & Barnes: Prices fell by 8.6% over the last year, and average discounts are in line with what they were a year ago at 7%.