By After a relatively quiet two years, activity is stirring in the prime central London (PCL) property market.
Compared to the wider London market and rest of the country, demand was notably stronger in the first quarter of this year inside zone 1.
In fact, the number of new prospective buyers in PCL was 84% higher than the five-year average. That compared to an increase of 71% across the whole of London and 42% in UK regional markets.
Furthermore, the number of offers accepted in PCL was 104% higher over the same period, which was greater than a figure of 83% in London and 43% in country markets.
As well as stronger demand and a bigger pipeline of sales, supply is also picking up more quickly.
The number of market valuation appraisals was 20% higher than the five-year average in PCL, compared to 7% across London and 14% outside the capital.
While other UK property markets stole the headlines during the pandemic thanks to the much-publicised ‘race for space’, prime central London is now moving back into the spotlight.
The fact prices have been falling for six years helps.
Average prices in PCL are 16% lower than they were at the start of 2016. That compares to a 9% decline in prime outer London and a 13% increase in country markets.
Prices fell in PCL as it bore the brunt of tax changes and political uncertainty in the wake of the Brexit vote in June 2016.
“People have worked out that there are hotspots of good value in prime central London,” said Stuart Bailey, head of prime London sales at Knight Frank.
“For example, you can buy a freehold house in Belgravia for less than £2,000 per square foot at the moment.”
The key question is when international buyers will return in meaningful numbers.
While overseas activity was strong in the final three months of last year after travel rules were relaxed in October, it has been more sporadic this year, initially due to the arrival of the Omicron variant at Christmas.
Given the extent of lockdowns in some parts of the world still, any return of overseas buyers is likely to be gradual rather than transformational.
“I’m not sure there will be a clear moment when international buyers return,” said Stuart.
“Some sellers are waiting for it to happen but it’s proving to be a rather erratic process.
By the time overseas demand picks up, interest rates will be higher and the cost-of-living squeeze will tighter anyway.
Sellers in PCL may instead want to take advantage of the fact that supply is tight and large numbers of UK-based buyers are actively looking for property at the moment.”
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