Knight Frank: Property market activity is lagging positive sentiment

Prime market activity hasn’t caught up with more positive sentiment, Knight Frank claims.

It comes as figures from the agency brand showed the number of market valuation appraisals requested by prospective sellers was 15% higher in prime central and prime outer London in January compared with the same month last year, while the number of new buyers registering was up by 8%.

However, the number of sales instructions was down by 16% and exchanges were 17% lower, reflecting the discrepancy between leading and lagging indicators, the agency said.

Average prices in prime central London were down by 1% on the quarter, taking the annual decline to 2.3% in January. Meanwhile, prices were flat in prime outer London, which narrowed the average annual fall to 1.5%, according to the research.

Stuart Bailey, head of prime central London sales at Knight Frank, said: “After being a buyers’ market for seven years, it’s not going to change overnight.
“Activity is not yet in sync with the more positive sentiment we are detecting.”

Tom Bill, head of UK residential research at Knight Frank, added that the UK housing market is at an “inflection point”, which means mixed signals for buyers and sellers. 
 

He said: “Inflation has fallen quickly and sent the cheapest mortgage rates below 4%, but some housing market data has been slow to catch up.

“Three separate announcements last week captured this fact perfectly.

“The growing sense of positivity was evident when Nationwide announced that house prices had risen 0.7% in the month to January, narrowing the annual decline to 0.2%. However, when the Bank of England said mortgage approvals had crept higher in December, there was only a hint of good news. 

“HMRC was positively gloomy by comparison when it announced that housing transactions had fallen in December.”

Step back from the numbers though, added Bill, and the three announcements tell you more about how long it takes to buy a house than anything else.

He said: “As lagging indicators turn more positive, we expect sales volumes to increase alongside house prices this year. There should even be a noticeable Spring bounce provided Rishi Sunak can stick to his preferred timetable of an election later in the year.”