Prime prices hit new low but sellers are ‘more motivated’ - LonRes

Achieved prime London sale prices fell by their largest levels since May 2021 last month, research suggests.

Analysis by property data firm LonRes reveals achieved prices fell by 3.3% compared to a year earlier during October.

While this is the largest annual fall since May 2021, LonRes said values overall have been broadly unchanged with little significant movement in either direction for almost a decade. 

Looking back at average October prices over this period, they have stayed in a range of between £1,250 to £1,350 per sq ft in each year from 2014 through to 2023 and currently sit very close to the 10-year average.

The report also showed a slower market.

There were 7.2% fewer new sales instructions in October compared to the same month last year and 3.2% fewer than the pre-pandemic average between 2017 and 2019.
Transactions saw larger falls, with 29.5% fewer sales than a year earlier and 8.2% fewer than the pre-pandemic average. 

October is traditionally the month with the highest number of properties going under offer, as sales are agreed on September’s new listings and buyers hope to conclude their moves before Christmas, LonRes said.

While slower conveyancing may scupper this ambition for some buyers in today’s market, LonRes said, under offer numbers did pick up in October, with 9.7% more than a year earlier.

However, it is worth noting that buyer demand last October was negatively impacted by Liz Truss’s brief spell as Prime Minister.

LonRes added that sellers this Autumn may be more motivated than in past years.  The number of properties being withdrawn from sale is 4% lower than a year earlier while the number being reduced in price is 15% higher.

The report said: “It may be the case that vendors are reluctant to withdraw and re-list later if they feel that the market will get weaker before it gets better, so are staying on the market longer and reducing asking prices to try and secure a sale.”

Commenting on the findings, Nick Gregori, head of research at LonRes, added: “October marked the one year anniversary of the political and economic turmoil of Liz Truss’s brief spell as Prime Minister.  The prime London sales market as a whole hasn’t really changed much in the time since.  

“Values are only slightly lower and activity has fallen back to typical longer-term trends.  However, there has been a more obvious shift, in the previously strong £5m+ market which has seen an increase in new instructions and move towards more mainstream prime market trends.  
 
“With limited expectation of significant price growth or falls in what is a largely discretionary market, there seems to be no rush for many potential buyers and sellers.  There is a sense that buyers are waiting for some positive news to spark them into action; without it they remain happy to wait and see.

“On the supply side our data suggests sellers are a little more motivated than usual.  We are seeing properties withdrawn at a slower rate than usual combined with more price reductions.

 It may be the case that some vendors see the current market as their best chance to secure a sale at a price they are comfortable with.  Some may expect conditions to weaken next year as economists forecast higher interest rates for longer and general uncertainty surrounding the run up to a General Election comes into play.”