Fewer homes are now changing hands in prime central London than during the trough of 2008, fresh research shows.
Looking specifically at sales of second hand residential stock, new analysis of LonRes data by Strutt & Parker shows that just 286 property deals across the prime central London postcodes took place during the second quarter of the year, which is significantly below the 347 recorded during the market downturn in Q4 2008.
To give context, these figures can be compared against the peaks of Q2 2006 when 1,148 properties were recorded as sold and Q4 2013 when 1,027 were recorded as sold.
The prime central London property market has been experiencing a slowdown for two years now due to an ever-growing number of headwinds, including the threat of mansion tax back in 2014, the devolution vote in Scotland, two batches of significant stamp duty changes, the general election in 2015 and most recently Brexit, according to Stephanie McMahon (below), head of research at Strutt & Parker.
She said: “Transactions in prime central London now appear to be at an even lower level than they were at the last trough of the global credit crunch at the end of 2008. It is worth noting that in turbulent times the prime central London property market becomes increasingly opaque with more properties being sold off-market, which does cause a lack of transparency – but nevertheless these recorded figures from LonRes are significant.
“It will be interesting to see whether the current currency play could be enough to spur activity for the market to make some form of recovery in the second two quarters of this year. The fall in sterling post-EU Referendum has helped to create further value for buyers seeking to get into the London market. Although the declines do not match those of 2008 – when the pound declined significantly having at one point (May 2007) reached 1:2 against the US dollar – they do open up obvious buying opportunities. If momentum does return, we could be at the bottom of the market now.”
Indeed, there are signs that activity levels are starting to pick up again after the run up to the Brexit vote which caused a kind of paralysis in the prime central London market, according to Charlie Willis, head of London Residential at Strutt & Parker.
He commented: “Now that we have a result on the vote, a layer of uncertainty has been removed, we also have a new Prime Minister, a revitalised cabinet and as a result our usual political stability will begin to return. Global perceptions of the UK and particularly London as a long-term safe haven should begin to return as a consequence.
“We have already seen the de-valuation of sterling make property look very attractive to committed overseas investors and expats, effectively providing an automatic discount off a purchase price for them, and I think this – coupled with a domestic market where there is still often a personal need for people to move home – is where our interest will come from over the next few months.”