Domestic prime buyers are acting ‘before foreign investors return’

The flat market in prime central London (PCL) is undergoing a resurgence, a buying agent claims.

Residential and investment buying agency London Central Portfolio (LCP) claims the level of enquiries from domestic buyers to purchase a property in prime central London (PCL) has tripled since the mini-Budget last Autumn.

Andrew Weir, chief executive of LCP, said all of the brand’s new enquiries have been from buyers seeking an apartment, implying the flat market is having a resurgence following the pandemic’s race for space.

More than half of enquiries have also been from cash buyers, Weir said, who are recognising their attraction to vendors who are prioritising those not relying on large mortgages.

According to LCP’s latest market review, which analyses data from Bricks & Logic, average PCL house prices remained level over the past twelve months staying at £3,833,559, whilst average flat values rose 0.3% to £1,123,498.

However, they fell on a monthly basis, down 0.2% for houses and 0.1% for flats and decreased by 0.8% and 0.7% respectively over the quarter.

Weir said flats are still holding their value, adding: “Generally, home hunters are city workers who are back in their offices most of the week now and want to be living in London rather than worrying about the hassle of commuting from the countryside, especially with recent public transport disruptions. 

“Now we’re into 2023, people have also realised that the economy hasn’t come crashing down as initially feared following the mini-Budget. 

“Many people are taking a view that inflation may have peaked and are taking confidence from early signs that mortgage rates are stabilising and even declining for those with large equity in their homes. This is all helping to bring a degree of momentum back into the local property market.”

Weir added that PCL prices have unsurprisingly fallen since their peak in 2015 due to the increase in property taxes, Brexit disruptions and the pandemic, but said: “As both domestic and international investors start to return, this increased demand combined with a shortage of stock is slowly starting to put upwards pressure on property prices. 

“The nature of PCL means that only a few transactions will significantly impact the market. Wealthy buyers who are not constrained by the increase in interest rates are wanting to take advantage of the current below historic peak pricing before values start to rise again.

“Others are seeing now as an opportunity to buy as there is a little less competition prior to the busy spring market.”

Apartments are particularly in favour as buyers seek to secure them before more foreign investors return, Weir added.

He said: “With vendors prioritising cash buyers over those who are relying on large mortgages, we have noticed that the market is moving from ‘who is making the highest offer’ to ‘who is most readily proceedable’. This presents another good opportunity for buyers to negotiate, because vendors like the fact that cash buyers can quicken the sales process substantially whilst reducing the risk of a deal falling through.”