The number of sales instructions in London was 17% above the five-year average in the first quarter of 2024, according to leading agency Knight Frank.

It says buyers are currently playing a bigger role in driving activity. While this has benefitted lower-value markets, there has been more hesitancy in discretionary, higher-value markets.

The number of new prospective buyers between £750,000 and £2m was 21% above the five-year in the first three months of year, Knight Frank data shows. Above £5m the increase was just 3%. Meanwhile, the total number of offers made between £750,000 and £2m was 6% higher, while above £5m there was a 6% decline.

The number of new prospective buyers, offers made and exchanges have all been notably higher in the south-west of the capital over the last six months. Indeed, the two London areas with the strongest price growth in the year to March were Wandsworth (2.6%) and Dulwich (2.3%).

Average prices in prime central London (PCL) fell 2.4% in the year to March, the same figure as recorded in February. Meanwhile, prices were down by 1.5% in prime outer London (POL) after rising by 0.1% on the previous month.

Tom Bill, head of UK residential research at Knight Frank, says: “The best way to describe the recent performance of the UK property market is ‘ten weeks of recovery followed by ten weeks of drift’. It is a pattern shaped by interest rate expectations, with mortgage costs dipping and rising as signals around inflation have been frustratingly mixed. 

“The result is a lack of urgency among buyers, a fact compounded by rising supply. The number of sales instructions in London was 17% above the five-year average in the first quarter of 2024.

“This mood of circumspection means needs-based buyers are currently playing a bigger role in driving activity. While this has benefitted lower-value markets, where a higher proportion of domestic buyers move for education or employment, there has been more hesitancy in discretionary, higher-value markets. Uncertainty around recent rule changes for individuals with non-dom tax status may have aggravated the situation. 

“For overall momentum to grow, a bank rate cut needs to feel much more imminent. After hovering above 4% since the start of February, a five-year swap rate starting with a ‘3’ would provide a boost for lenders and borrowers.

“For now, the evidence from the first quarter of this year only highlights the difference between higher and lower-value markets.”