LonRes: The prime London pandemic boom is over

Record numbers of prime properties were reduced in price last month as the pandemic boom is officially over, LonRes claims.

Analysis by the property data company shows the number of prime London properties seeing price reductions in January 2023 was the highest for that month since 2018.

It is the top end of the market that has seen the biggest increase in price reductions compared to last year, LonRes said, suggesting this could reflect the increase in available supply.

Prime London sales fell to 23% below 2019 levels in December, according to the research, but have bounced back in January 2023 to 3% higher than the same month in 2019.

However, the equivalent sales figure for January last year was 37% higher.

Both under offers and sales were consistently above their pre-pandemic levels in 2022 until the mini-Budget fallout hit the market in October last year, LonRes said.

The number of under offers fell from 41% above 2019 levels in September, to 11% below in October and since then they have hovered around 2019 levels, with under offers 4% higher in January 2023 than over the same month in 2019.

The number of new £5m plus instructions across the whole of the LonRes three prime areas in January 2023 was 167% higher than January 2019 and 43% higher than January last year, the report found.

Sales of £5m plus properties has also increased, up 92% compared with January 2019 and 56% higher than January last year. 

LonRes said: “It appears the resurgence in sales activity and recovery in prices in this market has helped encourage the largely discretionary sellers to list their homes, resulting in a feedback loop that has led to more sales and more homes being listed for sale.”

However, with high numbers of new instructions, the number of homes on the market at £5m or more is rising, up 15% annually, LonRes said, adding: “This might be a concern in the wider market, especially with the 10% decline in under offers compared to last year. 

“However, while many sellers have adjusted their price expectations given the large number of price reductions, the discretionary nature of the top end market suggests many others will simply withdraw from the market if they fail to achieve the price they expect.  

“This appears to be the case, with January 2023 recording the largest number of properties withdrawn from the £5m plus market in a single month according to LonRes records.”

Overall in January, achieved prime London prices were down 1.4% annually and up 3.3% on the pre-pandemic three-year average.

Sales were down 25% annually and 6.5% compared with between 2017 and 2019 while new instructions were up 10.7% and 7.4% respectively.

Anthony Payne, managing director of LonRes, said: “The pandemic boom is over for most of the prime London housing market but the top end is still going strong.  

“Housing market activity during January was lower than seen in recent years as higher interest rates and weaker demand brought sales activity back down to pre-pandemic levels.  

“However, January is usually a quiet month for the housing market and everyone’s attention will be focused on the next couple of months, as the spring market gets underway.  The top end of the market, £5m plus, is still strong as rising stock levels bring more sales.”