Savills: PCL prices have stopped falling

Prime central London (PCL) property values flattened out during the first quarter of 2024 after six consecutive quarterly falls, figures suggest.

Analysts by agency brand Savills suggests that while prices were down annually, are early signs of recovery in the PCL market for the first time since the mini-Budget of September 2022.

The price of prime homes in central London levelled out in the first quarter of 2024 with a rise of 0.1%, albeit the only discernible uptick in values was in the market between £3-5 million, up 0.3%.

Outer prime London also experienced positive quarterly growth – up 0.8% in the first quarter.

Lucian Cook, head of residential research at Savills, said: “The outlook for the housing market has certainly improved, partly because the mortgage market has recovered more quickly than expected. With the first rate cut rapidly coming into view and recessionary risks easing, greater stability has returned to the cost of mortgage debt, which has positively impacted domestic prime markets where many buyers rely on borrowing, most notably in leafy outer prime South and West London, as well as the commuter belt.”

Against that backdrop, Savills said its March client survey of 1,200 buyers and sellers showed a further pick up in commitment to move, and provided early signs that buyers’ budgets are beginning to edge upwards.

Almost every agent (88%) surveyed across the regions expects to see stock levels improve over the coming three months, meaning that buyers will have more choice, and sellers will need to remain competitive on pricing. 

Agents also agreed that regional buyers are more concerned about market uncertainty as a result of the upcoming general election (93% vs. 70% in London), followed by changes to taxation for private schools (80% vs 15% in London). As a result, buyers are still expected to be less committed until the dust has settled.

Cook added: “This all points to a market that is in early stages of recovery, albeit a finely balanced one. 

“Despite a General Election nearing, the short odds on a change in government mean that political change is already largely priced into the market. 

“However, some buyers are expected to remain slightly more cautious in the run up, particularly given the abolition of non-doms status, which, although expected on a change in government, took the market by surprise at this juncture.

“After an initial hiatus, we expect to see a period during which those affected reflect on what the precise changes in their tax position mean for their longer term plans. As a result, parts of prime central London are expected price sensitive for a while longer.”