Competitive bidding and sealed bids make ‘surprise return’ to Prime London

The practices of competitive bidding and sealed bids have made a 'surprise return' to the Prime Central London (PCL) property market, according to Savills.

The global agency reports that during Q2 2019, 16% of Savills deals saw competitive bidding, with 56% of these transactions resulting in sealed bids. 

While this increased activity is helping to 'underpin' transactions, the agency says it is not leading to price inflation against a backdrop of political uncertainty.

Lucian Cook, the firm's head of residential research, says the rise in demand comes from relatively low stock levels and buyer commitment in a 'fragile marketplace'.

Savills' latest research reveals that average values across the PCL market held their own in the second quarter of 2019 for the first time since the third quarter of 2015.

While prices continued to show falls on an annual basis, these have reduced to just -1.8%, less than half the level seen this time last year.

This has resulted in the gap between the prime London markets and prime markets across the UK closing further.

In the high-profile, high-value markets of prime central London prices fell by a further -0.9% in the quarter, resulting in year-on-year price falls of -3.6%, similar to the levels seen since the end of 2017. 

This means that price falls across all prime central London value bands have now converged at around 20% below their peak of market 2014 levels.

"We face heightened uncertainty over what a new prime minister will mean for Brexit, the economy and, critically, tax policy, which suggests the prime markets will remain price sensitive across the remainder of 2019," says Cook.

"We have already seen stamp duty reform raised by Boris Johnson and his supporters. While it remains to be seen whether a compelling case can be made for cuts at the top end of the market from a tax revenue perspective, such a move now seems more likely than it did under the previous administration."