New-build glut adds volatility to improving central London market

Respected buying agency Black Brick says there is evidence that prices in prime central London may be stabilising and transactions volumes picking up.

It says recent surveys by Knight Frank and investment advisory company London Central Portfolio suggest prices and sentiment improving even at the higher end of the market - which in prime London terms means £5m and above - while the sub-£2m market had not seen any significant downturn anyway. 

Black Brick says this suggests a mood of optimism, tempered by caution.

“It’s logical that the higher end of the market should show the first signs of recovery, given how far it’s fallen,” says managing partner Camilla Dell. 

“However, we are not yet seeing the beginnings of a stampede back to prime central London and continuing political uncertainty – around Brexit to an extent, and that associated with the likely longevity of the current minority Conservative government – is casting something of a cloud,” she adds.

The market for homes below £2m across London has remained supported by domestic buyers, says the agency. 

Part of this segment benefited from changes to stamp duty and, outside traditional prime central London markets, has seen continued activity from families looking to upsize, for example.

However, the new build market is less straightforward, Black Brick suggests.

Firstly there are bargains to be had in the new-build resale market, where buyers have bought off-plan but are facing completion and are seeking to avoid making final payment. 

The agency says some of these sellers are prepared to sell at considerable discounts - the firm has been offered one property in Nine Elms for £1.6m compared with an original price of £1.9m.

“Whilst there continues to be some uncertainty around future price growth and rental yields due to the volume of units constructed in Nine Elms and surrounding areas, there comes a point when the discount to the original paid price becomes so big that it’s worth taking a view on. I have no doubt that in several years’ time when the area is fully developed savvy buyers that picked up deals today will be pleased that they did” says Dell.