London sales decline but lettings rise

By Michael Hardware, Director of Planning and Property

The prime central London sales and letting markets are key barometers to market sentiment, and an indicator of how the rest of the UK will move in the coming months. Knight Frank issued its monthly update earlier indicating a fall in May of 3.6% in prime central London sales above £10m, and a decline of 11.5% in the £1m -£2m range.

It reported that Brexit is having an effect with some vendors hesitant due to the uncertainty, but other active vendors are taking advantage of the lack of supply. This in itself making a contribution to maintaining prices if only for the time being. The number of prospective new buyers, however, rose by 21% in the year to May, which suggests there is still a lot of interest out there.

The lettings market is showing similar interest with the number of prospective tenants registering for prime central and prime outer London rising by two-thirds in May compared with 2018. The number of viewing also increased by 20% with Knight Frank agreeing 19% more tenancies in the year to May compared with 2018 – this is the largest rise recorded since 2010.

The super-prime market (£5k+ per week) has seen an extraordinary start to the year for Knight Frank with 57 tenancies agreed so far – a 54% increase on last year.

It seems uncertainty is making developers think more carefully before bringing properties forward for sale, and for buyers to buy, deciding instead to rent for the time being.

The whole lettings market is, however, being hampered by changes in landlords’ tax rules and also in various regulations being brought in by council’s around the country, especially multi-occupancy.