Signs of recovery in prime central London market
The prime central London property market saw distinct signs of an upturn in the second quarter of 2017, but buy-to-let sales remain sluggish, new data has unveiled.
After two years of stagnation, both sales volumes and average prices rose, according to data from London Central Portfolio, in conjunction with independent analysts Acadata, using data from the Land Registry.
Sales were up, with an annual increase of 4.8%, while average prices rose by 7.9% quarter on quarter, although this has largely been attributed to a number of high value transactions as buyers made the most of price discounting on luxury properties, whilst the remainder of the market was less active.
The best performing sector for sales was the £5 million to £10 million range, which saw sales increase by 23% on the first quarter of the year.
The second quarter included the most expensive sale ever as a flat in The Knightsbridge Apartments was sold for £90 million.
However, the buy-to-let sector proved the most sluggish with a 1.3% increase in average prices for property under £810,000 during the same period.
Naomi Heaton, LCP chief executive officer, commented:
“The increase in average prices appears to reflect a greater proportion of high value properties being sold, rather than any significant underlying growth. Not only have we seen some very large individual sales but transaction data shows the £5 million to £10 million bracket was the most active with a 23% increase over quarter one.
“This can be attributed to international home buyers taking advantage of notable price discounts, alongside beneficial currency exchange rates. The buy-to-let sector, on the other hand, is seeing a much slower picture as investors continue to adopt a wait and see attitude,” she explained.
Jorden Abbs, head of operations at Commercial Trust, said:
“Uncertainty over Brexit and the additional financial pressures created by government changes to the taxation of buy-to-let, have been keenly felt in London, with the 3% stamp duty levy adding thousands of pounds in extra costs to landlords.
“Therefore, it is to be expected that buy-to-let sales growth remained slow in Q2, with landlords adopting a patient attitude before committing to further investment.
“At the higher end, it is certainly encouraging to see big transaction taking place. Meanwhile the buy-to-let market continues to provide competitive yields for landlords and whilst affordability continues to price many first-time buyers out of the market for the time being, there will be plenty of demand for buy-to-let rental property in the capital.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.