LonRes: Longer sales times are creating ‘vicious cycle’ of fall-throughs

Prime London property sales are taking longer to go through once under offer, which is creating a vicious cycle of fall-throughs, LonRes warns.

April market data from the property data network said agreed sales are getting stuck at the under offer stage for longer – up around 10% - which has pushe fall-throughs up by 26.6% during the first four months of the year compared with the pre-pandemic average.

LonRes said: “Longer average time on the market (by around 10%) explains the rest, meaning many agreed sales are stuck at the under offer stage for longer.  

“While these sales are eventually going through, the longer they spend under offer but not exchanged leaves them more vulnerable to fall throughs, creating something of a vicious circle.”

The analysis highlighted that buying agents’ purchasers -  generally considered serious and motivated- - increased steadily from early 2019 to a peak in December 2023, and in April 2024 remained within 5% of that recent high point, suggesting demand remains robust.  

Other sales market metrics suggest that vendor motivation continues to grow, LonRes claims, with 24.2% more price reductions compared with last year and 3.1% fewer withdrawals, both of these in the context of 10.5% more homes on the market.  

Average achieved sold prices fell by 2.5% in April on an annual basis, compared to the 7.8% drop recorded in February, according to the research, while sales activity was down 0.9% annually.

However, 19.9% more properties went under offer compared with last year and new instructions in April rose by 26.7% on an annual basis, which is 23.0% higher than the 2017-2019 pre-pandemic average.

Nick Gregori, head of research at LonRes, said: “The prime London sales market is showing some resilience in the face of negative external factors– such as high interest rates and global geopolitical issues – but activity for the time of year remains relatively subdued.  

“Agents continue to report good levels of interest in the form of enquiries and viewings, and some of this is translating into agreed deals.  

“But there is a lack of urgency from some of these prospective buyers, who are willing to wait and see whether values or borrowing costs fall and give them more purchasing power later in the year.  Despite this caution, under offer numbers and enquiries from buying agents indicate that the pipeline of potential sales over the next few months is robust.

“Sellers are looking a little more decisive, with new instructions increasing again in April and many of those already on the market willing to reduce asking prices in order to secure a deal.  The number of homes for sale across prime London is steadily rising, but price falls have been slowing in 2024 so far, suggesting there is relative balance between demand and supply.”

Gregori said higher price points at £5m-plus are seeing more transactions relative to historical levels but also more growth in supply, although not across the board.

He said: “Knightsbridge & Belgravia has seen a significant increase in homes for sale compared to last year, while South Kensington next door has seen a fall.  Overall, there are more than a quarter more homes available in this market than a year ago.”