3rd December 2020

London Real Estate

The central London super-prime market sector has, in general terms, defied gravity over the summer months, a period generally known to be quieter than the rest of the year.

However, demand is being matched with supply. We are advised that new for sale instructions in the three months to September were 77% higher than in the third quarter of 2019.

Buyer and seller expectations on price also appear to be aligning. All of this suggests that there is a balanced market and, at a headline level, there has been little movement in prices.

In central London, houses saw marginal growth of 0.1% in Q3 2020, compared with a fall of -0.4% for flats. This is despite a lack of demand from international buyers, currently constrained by travel restrictions, who would usually be active in this market.

A lack of exceptional quality inventory at the top end of the market has resulted in a slight outperformance of the highest value homes. This sector continues to look good value after suffering the most over the past six years because of successive stamp duty changes and political uncertainty.

We are removing from this analysis the ultra-prime £100m+ market where transacting is very much based on the discretionary acquisition of trophy assets. This could, for example, be a house on Kensington Palace Gardens or a large penthouse (minimum 6,000 square ft) in the priciest and most exclusive new apartment developments in Mayfair and Belgravia.

It has been widely reported that the experience of lockdown has triggered many to reassess their current home and, in particular, search for a property with a garden.

In a recent survey the majority of respondents in London said the amount of garden or other outside space had become more important to them in their search for a new home. In many cases access to a communal garden or private garden square partly compensated. We consider this may become less important as we fully emerge from the pandemic and see London life return to normal, which is now predicted to happen in the second half of 2021.

Market performance throughout the rest of next year will be dependent on the extent to which the economy has recovered and the efficiency and availability of the vaccination programme that is now looking positive, based on latest news reports.

Easing of international travel restrictions will be particularly important for central London and other markets more reliant on overseas demand.

Whatever, and whenever, you decide to purchase make sure you are professionally advised. It pays to have experts navigate the market, as micro-knowledge and reliable research are essential to sound purchasing.