Almost half of properties sold in prime central London (PCL) this year had a price reduction, research suggests.
The latest data from LonRes for May suggested the PCL market is currently characterised by more instructions as well as increased reductions.
Across prime London, 47% of properties that sold between 2017 and 2019 had their asking price reduced before sale, LonRes said.
This dropped to 40% in 2022 but in 2024 so far has increased again to 48%.
The latest data also shows significant variation between areas in terms of current levels of price reductions, with more than 60% of sold properties in South Kensington being reduced prior to a deal being agreed, compared with 37% in Mayfair & St James’s.
Average values, based on achieved £ per sq ft figures, fell by 2.8% in May on an annual basis, leaving prices approximately in line (+0.7%) with pre-pandemic levels, according to the research.
Transactions in May fell by 14.8% against the same month last year and were 5.8% below the 2017-2019 (pre-pandemic average) May average. The number of properties going under offer in May was 4.3% higher than a year ago, LonRes said.
While the demand side of the equation looks relatively consistent, more is happening with supply. New sales instructions were 12.1% higher in May than a year ago – every month this year has been above the 2023 equivalent.
This is 10.8% above the 2017-2019 May average. The number of properties withdrawn from the market increased in both April and May, but for the whole year to date is just below last year.
Overall, there market now has more new instructions, fewer sales and slightly fewer withdrawals, so stock on the market is growing. At the end of May there were 12.2% more properties for sale across all of prime London than a year earlier, and this is 26.1% higher than at the end of May 2019.
Nick Gregori, head of research at LonRes, said: “May saw more of the same for the prime London sales market, with values broadly static and activity relatively subdued, as has been the case for much of the year. Demand for homes is still out there but is tending to be price sensitive. Motivated vendors understand this and we are seeing asking prices being reduced in greater numbers than usual.
“The upcoming election dominates the news at the moment but historically the housing market has tended to shrug off any impact from previous votes. Some buyers and sellers, including potential ones, remain cautious but this is as much about the economy as politics, waiting for better growth figures and interest rate cuts.
“Little in the manifestos looks likely to have a major impact on the prime London market, with policies aimed more at renters and prospective first-time buyers across the country. Labour have promised a further increase in stamp duty for international buyers, but similar changes in the past have tended to be absorbed by the market.
“Already announced policies include changes to the rules for ‘non doms’ and further regulation of the private rented sector. There is little sign yet of widespread impact from these, though of course these may take time to really impact behaviour.
“The main story in both the core and £5m+ markets is the level of new supply and price reductions. Across prime London for all price points, new instructions in May rose by 12.1% on an annual basis and the stock of homes for sale at the end of May is 12.2% higher than a year earlier. The equivalent figures for £5m+ homes are 51.8% more new instructions and 27.0% more properties for sale.”