Prices up in Prime Central London but recovery is fragile - warning

It’s not a big rise, but price growth has returned to the Prime Central London sales market for the first time since February this year.

Knight Frank says the 0.2 per cent rise in prices recorded in the third quarter of 2020 was in fact the same figure recorded during the so-called ‘Boris bounce’ that followed the General Election in December 2019.

“While ‘bounce’ is not the best description for what happened in prime London markets between July and September, there was a notable recovery from the period of marked uncertainty that caused prices to fall in Q2” says the agency.

This recovery followed six consecutive months of quarterly price falls in PCL - although that was actually shorter than the 13-month run of declines during the global financial crisis.

In prime outer London - another key sector for high-end agencies - September marked the second consecutive month of rising prices over a three-month period. It meant the annual price decline narrowed to 3.9 per cent. 

This stronger performance has been driven by an increase in demand for family houses and more outdoor space since the lockdown.

But Knight Frank cautions that in a year when demand has ebbed and flowed so dramatically, the recovery is still fragile and while demand remains strong compared to previous years there are signs it won’t be as resurgent during this final part of the year as it was in Q3.

The number of new prospective buyers registering in London was 44 per cent above the five-year average in the week ending October 3. 

That increase has halved since July and August.

But the agency concludes that “while the initial post-lockdown surge in activity has subsided slightly, it is important to acknowledge that transaction activity will remain strong in Q4 due to the length of time it will take for deals agreed in the summer to reach completion.”