Property transactions looking up across prime central London

Despite ongoing political and economic uncertainty, there has been a major improvement in sales volumes throughout prime central London as purchasers seek to take advantage of lower asking prices, according to new research.

JLL’s prime central London report shows that the volume of transactions in the final quarter of last year increased by 36 percent compared with the third quarter, reflecting a sharp rise in demand from domestic buyers while the weak pound has made property in prime central London even more enticing to foreign investors.

Onyx Real Estate, a London-based consultancy firm, notes that although prices fell again in the last quarter, data from JLL shows that crucially the price declines have diminished during the course of 2016.

The average price drop of just 0.1 percent in Q4 was a marginal improvement on the 0.2 percent fall in Q3 and a notable change from the 1.1 percent and 0.9 percent declines witnessed in Q1 and Q2 respectively.

“The final quarter of last year was also the first quarter in 2016 that prices in the sub £2 million market did not drop. Prices also remained broadly flat in the £2-5m price bracket during Q4”, Ugochukwu Arinze, Onyx Real Estate CEO, observes.

According to her, JLL expects transaction levels to be notably higher in 2017 compared with last year and predicts that prices will remain broadly flat during the year ahead.

Richard Barber, director (sales) of residential agency at JLL, commented, “Q4 saw a marked upturn in transactional volume throughout prime central London with some notable high value sales.

“Whilst some values have undoubtedly slipped throughout 2016, it was interesting to note that exceptional properties were still commanding high rates per square foot and on a similar level with  2014 peak values.

“Much of this activity can be accounted for by the weakness of sterling and stronger post-referendum sentiment. Whilst this is encouraging going forward, the market will still be mindful of potential external influences such as the road towards a hard Brexit during the course of 2017. Nevertheless, both prime central London demand and sentiment now appear to be stronger.”

Meanwhile, a claims broker, notes that the mortgage market is ‘almost at pre-credit crunch best’, adding that the number and range of mortgages being offered in the UK has almost returned to its pre-credit crunch level.

That’s the view of Matt Cassar, the managing director of the Finance Advice Centre, who says the market continues to defy pessimists concerned about the economy and Brexit.

Last year more first-time buyers took out mortgages than at any point over the past 10 years and the mortgage market began 2017 strongly with a total of £21.8 billion worth of mortgages taken out in January this year, up from £20.4 billion the month before.

Cassar says the strength of the market is helped by a diverse range of products including long-term fixed rate deals, mortgages specifically for students, for the over-55s, for buyers who need to borrow 90 per cent of the value of their new home, and also for people with adverse credit histories.

At the same time, new figures from the Intermediary Mortgage Lender’s Association showed that mortgage intermediaries, including Finance Advice Centre, experienced a 26 per cent increase in the numbers of inquiries in the last quarter of last year.

“We are almost back to the pre-credit crunch days in terms of the numbers of lenders and variety and amount of products available. There are some variations in mortgage activity when you look deeper but the overall picture – especially when you consider the downbeat predictions that have been issued over the past year – is extremely healthy”,  says Cassar.