PCL sales market finished 2016 on a high as lettings struggles

The Prime Central London (PCL) property market finished 2016 on a high with transactions increasing by 36% between Q3 and Q4, according to JLL.

The agency reports that while average prices  continued to drop, the 0.1% fall was a vast improvement on the 1.1% and 0.9% declines recorded in Q1 and Q2.

Other findings include that Q4 was the first quarter in 2016 that prices in the sub-£2 million market did not fall and that prices remained 'broadly flat' in the £2-5 million price bracket during the last three months of the year.

JLL says it expects 2017 transaction levels to be notably higher compared to last year and that prices will remain broadly flat over the next nine months.

The figures for lettings are not quite so positive, however. JLL reports that average rental values across PCL fell by 3.1% during Q4 2016.

This was the fourth consecutive fall recorded and has left rental values 8.6% lower than they were at the start of 2016.

The 3.1% decline in Q4 was greater than the 1.9% and 2.3% falls seen in Q2 and Q3 respectively.

JLL forecasts that rental values will remain stable during 2017 before pushing higher from 2018. 

Commenting on the sales market, Richard Barber, JLL's director of residential agency, said: "Much of this activity can be accounted for by the weakness of sterling and stronger post-referendum sentiment."

"Whilst this is encouraging going forward, the market will still be mindful of potential external influences such as the road towards a hard Brexit during the course of 2017."

He said that both demand and sentiment in PCL now appear to be stronger.

Commenting on the lettings market, Lucy Morton, head of agency at JLL, added: "The imbalance between supply and demand was corrected by the end of the year with much of the excess stock soaked up."

“Overall, fewer overseas families moved to London with companies in 2016 compared with previous years as organisations preferred to house their senior directors in high-end one and two bedroom apartments."

"There was another year on year increase in demand from high net worth international students last year and we anticipate this will increase again during 2017.”