Knight Frank: Prime London market has made ‘hesitant’ start to 2024

The prime London sales market has made a hesitant start to 2024, Knight Frank has said.

Despite the agent and property brand revising its house price expectations upwards earlier this year, Knight Frank has released data showing a decline in prices and offers for February.

Its analysis found the average annual price fall in prime central London (PCL) was 2.4% in February while the comparable figure in prime outer London (POL) was down 1.6%, described as an “uncertain start to 2024.”

The number of new prospective buyers was 9% higher than the five-year average in February, according to Knight Frank data adjusted for leap years. 

That was lower than the equivalent rise in January though and reflects the slightly gloomier mood in the second month of the year in relation to the outlook for mortgage rates, the agent said.

This change was also visible in the number of offers made, which is a good measure for buyer sentiment. While the number was up by 1% in January versus the five-year average, there was a 12% decline in February.

Tom Bill, head of UK residential research for Knight Frank, said “A developer once said that after a slowdown, you need no further bad news for two consecutive quarters for a recovery to take hold. 

“Perhaps an overly-simplistic rule but one that comes to mind when looking back at the last few months. Inflation fell faster than expected in the final quarter of last year and by Christmas money markets were pricing in five interest rate cuts of 0.25% in 2024.

"The positive mood didn’t last long into 2024 due to stubborn underlying inflation and mortgage rates have begun to creep back up. In the background is a swirl of bad news that includes an increasingly heated countdown to the general election and overseas military conflicts. And then came this month’s Budget.

“For buyers and sellers, they should look for some hope in what the Bank of England says rather than what it does (it is unlikely to cut) when it meets later this month.”