Property prices in central London declined 1.1 per cent in the first two months of this year, while average annual rental values fell 1.5 per cent in March, according to the latest reports from property consultancy group Knight Frank.
However, despite the downturn, the market seems to be stabilising amid political uncertainty. “While the market remains sensitive to political events there currently appears to be a sense of (relative) stability being restored,” said Tom Bill, head of London residential research at Knight Frank. “The impact of stamp duty has been substantially absorbed and is now an accepted cost of transacting.”
Trading volumes have also stabilised, with a 2 per cent increase in the year to February 2018 compared to the previous 12-month period. However, house prices in prime areas are now 8 per cent below their peak in August 2015, and prices are unlikely to increase in the coming months because of continued uneasiness surrounding the Brexit deal.
In the rental market, average annual rental values for prime properties fell 1.5 per cent in March, driven by a drop in supply: the number of new lettings listings fell 5 per cent year-on-year in the 12 months to February. However, average rents increased 0.2 per cent between February and March, the first monthly rise since September 2015.
Demand for rental property in central London continues to grow, which may place continued upward pressure on rents. The number of new people looking for rental property who registered in the first two months of 2018 was 16 per cent higher than the previous 12-month period. The number of viewings rose 14 per cent over the same period.
As of February, rental properties accounted for 62 per cent of all listings in prime central London, compared to 71 per cent in July 2017.