Five years in Prime London: prices down 15% and supply 45% down

The latest market snapshot of prime central London suggests that homes there are now 15.2 per cent cheaper than five years ago - and supply is down by almost a half.

Coutts London Prime Property Index reveals that prices fell another 0.8 per cent in the third quarter of 2019, undoing some gains made in the first half of the year.

New instructions also remain low, some 10.5 per cent down on last year and a remarkable 45.2 per cent below the 2014 peak, making it a challenge to find new stock. 

Despite revealing a recent flatlining on price, the Coutts study does show that sales activity was up 10.3 per cent in Q3 compared to the previous quarter. 

The index also revealed how the average discount on asking price across London now stands at 10.3 per cent - which is actually the lowest figure seen in two years. 

The largest of these discounts are being negotiated on the higher value properties with super prime properties costing £10-plus; there are seeing around 15.2 per cent coming off the asking price.

But there are pockets of major improvements - on an annual basis, prices in Mayfair & St James’s, for example, are up 11.1 per cent.

“The two biggest risk factors we’ve seen for property investment have been raising taxes and ongoing uncertainty surrounding Brexit. While the three per cent surcharge for investment property is likely to remain in place, there are now reasons for optimism regarding a potential bottoming of the market” says Alan Higgins, chief investment officer at Coutts. 

“Firstly, we expect Brexit to be resolved over the coming months, likely with a deal. Should this happen, we believe that overseas investors could be encouraged back to the UK market, attracted by very low sterling exchange rates that make UK properties a particular bargain for the non-sterling buyer” he adds.

Additionally, Higgins says: “There is evidence to support our ‘low for longer’ view on interest rates. In the US, a bellwether for global markets, short-term rates have peaked already at below three per cent, indicating that the global structure of rates is much lower than previously thought. We believe that this low global interest rate structure could be a key long-term support for real estate.”

The bank’s breakdown for prime central London is as follows:

- Islington & Hampstead: Held up well since 2014, with market dominated by buyers looking for family homes. Prices in Hampstead & Highgate are just 3.5 per cent below the peak and in King’s Cross & Islington, just 4.5 per cent lower than five years ago;

- Battersea, Clapham & Wandsworth: Prime properties here are taking 165 days to sell on average;

- Bayswater & Maida Vale: Lack of stock continues to be a challenge in this area, and new instructions have almost halved compared to 2014;

- Chelsea: Over half of property here is sold at a discount to asking price, with buyers on average negotiating 12.9 per cent off;

- Fulham & Earl’s Court: Although higher than 12 months ago, prime property prices in this area fell in the last quarter and are now 22.0 per cent cheaper than the peak of 2014;

- Marylebone, Fitzrovia & Soho: Prime property sales fell 32.2 per cent in the last year and are down nearly 50 per cent compared to peak activity levels;

- Hammersmith & Chiswick: Buyers in this area are grappling with fewer properties on the open market, with stock levels down 37 per cent compared to the end of 2017;

- Hampstead & Highgate: Prices in Hampstead & Highgate are just 3.5 per cent below the peak, although a lack of new instructions, which are significantly down on previous years, is presenting a challenge for buyers;

- Kensington, Notting Hill & Holland Park: Lack of stock continues to be a challenge for buyers in this area as new instructions have halved compared to 2014;

- King’s Cross & Islington: Prime property prices here are just 4.5 per cent below the peak; a lack of new instructions will be a challenge for buyers as there are significantly fewer compared to previous years;

- Knightsbridge & Belgravia: Sales volumes here are 43.1 per cent lower than what they were in 2013;

- Pimlico, Westminster & Victoria: The number of properties available for sale continues to slide - there are 31.2 per cent fewer properties on the market now than there were at this time two years ago;

- South Kensington: Sales volumes here are 42.5 per cent lower than they were in 2013;

- St John’s Wood, Regents Park & Primrose Hill: Sales are relatively slow here, with prime property taking 155 days to sell, on average;

- Wimbledon, Richmond, Putney & Barnes: Buyers here will find the lack of stock available for sale to be a major challenge - new instructions fell 75 per cent in the last two years.