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Prime Central London (PCL) values fell marginally by -0.1% in August, but saw the sharpest annual drop (-2.9%) since the latter half of 2019. Despite the improved outlook for affordability with more settled interest rates and the regular availability of sub-4% mortgages, transaction volumes across all markets remain subdued.
Prime Central London (PCL) values fell marginally by -0.1% in August, whilst prices across Greater London remained static. England & Wales saw nominal 0.1% growth, but over the 12 months to August, values have fared slightly better, increasing by 1.3%. Meanwhile, PCL prices saw the sharpest annual drop (-2.9%) since the latter half of 2019.
Despite the improved outlook for affordability with more settled interest rates and the regular availability of sub-4% mortgages, transaction volumes across all markets remain subdued. PCL saw the steepest annual decline, with sales down -19.2% on the previous year, averaging just 58 transactions per week (a massive 75% below the sales volumes seen at the transactional market peak in 2000).
A general lack of urgency, high supply, ongoing economic and political uncertainty, both globally and in the prime London market, have prompted many of the big agencies, including Savills and Knight Frank, to cut their property price forecasts for this year and next, with both now predicting a -4% dip in PCL values in 2025.
With the looming Autumn Budget, buyers, sellers and industry professionals alike are waiting to see what the new landscape for the property market will look like. Speculation around potential taxation changes, from a possible overhaul of Stamp Duty and Council Tax to Capital Gains Tax being levied on main residences and a potential cap on the value of lifetime gifts, has increased uncertainty in the market, ultimately causing many to delay their decisions. It may mean that the worst is yet to come for owners looking to exit the market, although clarity over the direction of travel may also help to provide stability.
There is, meanwhile, a pool of smart buyers with a longer-term view who are capitalising on falling prices and making the most of the window of opportunity to secure prime London real estate at significantly good value. Over the last few months, we have seen a notable increase in new buyer enquiries, both homeowners and investors keen to crack on with their search whilst there are deals to be had within a less competitive market. That is coupled with a strong rental market, with yields for small flats in PCL sometimes now reaching 6% gross.
Flat and house prices were down across all Central London villages in the 12 months to August. Average flat values decreased most significantly in Chelsea (-4.4%), Kensington (-4.3%) and in South Kensington (-4.2%), where prices remain the furthest below their 2015 market peak (-20.3%) than anywhere else in PCL.
House prices have similarly decreased over the year across PCL, with discounts ranging from -2.6% in St James & Westminster to -4.4% in Notting Hill & Holland Park. As with flats, houses in South Kensington are showing the greatest value when compared to their 2015 peak (-12.4%), closely followed by Knightsbridge (-12.2%) and Chelsea (-12%).
Buyers looking for a deal should consider the excellent buying opportunities available in prime London in a less competitive landscape, with potential for value uplift via refurbishment. Navigating the current market is tricky, especially for unfamiliar buyers. LCP Private Office is on hand to assist anyone looking for clarity, access to the best opportunities and the right guidance to make informed decisions.
LCP Private Office is not just a buying agent. We help homeowners and investors acquire, renovate, design, let and manage their property in Prime Central London. Whether you’re a first-time buyer or a seasoned investor, our experienced team are here to help.
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