A busy market, but prices under pressure
The London prime property market was as busy as it’s ever been over lockdown, but prices are still finding their feet.
+27.3%
Rise in number of properties sold compared with Q1 2020, just as the first lockdown hit.
18 days
Properties are selling 18 days more quickly than this time last year.
-4.7%
Fall in prices compared with same period last year.
+27.3%
Rise in number of properties sold compared with Q1 2020, just as the first lockdown hit.
18 days
Properties are selling 18 days more quickly than this time last year.
-4.7%
Fall in prices compared with same period last year.
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Overview
chapter 01
Overview
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Source: Coutts & Co, LonRes, April 2021
- With properties spending less time on the market compared to a year ago, sellers appeared to prioritise a quick sale rather than hold out for a higher price this quarter.
- Overseas buyers, an important source of demand for central London homes, have faced travel restrictions with fewer able to make the trip over to purchase or view prime property, which may also have impacted prices.
15.2%
Prices are still 15.2% below the market peak of 2014.
-4.7%
Prices are down on a 12-month view.
-3.1%
Prices have fallen this quarter after the bump in Q4 2020.
Source: Coutts & Co, LonRes, April 2021
- With properties spending less time on the market compared to a year ago, sellers appeared to prioritise a quick sale rather than hold out for a higher price this quarter.
- Overseas buyers, an important source of demand for central London homes, have faced travel restrictions with fewer able to make the trip over to purchase or view prime property, which may also have impacted prices.
“The prime property market has been febrile so far in 2021. Stamp Duty holidays and the impending surcharge for non-resident buyers have disrupted usual market patterns. My conversations with clients suggest they’re thinking more about the quality of their lives at home than these measures. The last 12 months has made it clearer than ever that home is about making a family life you want to live; not just pennies and pounds.”
pETER FLAVEL, CHIEF EXECUTIVE, COUTTS
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Source: Coutts & Co, LonRes, April 2021
- Activity in the London prime property market continued to rise in Q1, despite the conditions of lockdown.
- The impending stamp duty holiday deadline on 30 June spurred on purchasers looking to take advantage of the savings. The deadline was extended in March, but by then many buyers were ready to complete.
- While the number of overseas buyers has been low due to travel restrictions, the arrival of a 2% stamp duty surcharge on overseas buyers at the end of March acted as an incentive for them to transact, too.
- New instructions were slow at the start of the quarter as many sellers assumed they’d left it too late to benefit from the influx of buyers hoping to meet the stamp duty holiday deadline and others were put off by lockdown. In March, the stamp duty extension and positive news on the easing of lockdown restrictions resulted in a surge in new instructions, making up for the slow months.
Wider discounts and fast sales suggest sellers eager to transact
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Discount Impact on £5 million asking price Latest figure (Q1 2021) -8.6% -£430,000 Previous quarter (Q4 2020) -7.9% -£395,000 Last year (Q1 2020) -9.0% -£450,000 Source: Coutts & Co, LonRes, April 2021
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Source: Coutts & Co, LonRes, April 2021
- The average discount to asking price in Q1 2021 of -8.6% was higher than in Q4 2020 (-7.9%), suggesting sellers were prepared to accept lower offers this quarter.
- Higher discounts were a contributor to the drop in overall prices.
- Properties are spending less time on the market than they were a year ago, the number of days on the market (between listing and sale) 10.7% lower than the previous year.
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Local Insights
chapter 02
local insights
CENTRAL PRIME BUYERS GO FOR GREEN SPACE
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SW7/SW1
South Kensington, which saw sales boom a year ago, recorded 14.9% fewer sales in Q1 2021 than Q1 2020, albeit from a high base. Knightsbridge & Belgravia also saw transactions fall by 23.4% annually.
SW3/W11
Chelsea, which recorded a 22.7% annual increase in sales in Q1 2020, saw a further 39.3% annual increase in Q1 2021. Kensington, Notting Hill and Holland Park also recorded a 44.4% annual increase in Q1 2021, following a 12.3% rise in sales a year earlier.
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Trends for 2021
chapter 03
prime property market trends for 2021
LOW INTEREST RATES
WILL SUPPORT DEMAND
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The prospects for economic growth in 2021 have led to higher inflation expectations and rising bond yields (that is, falling prices). However, there’s no sign of any change in the Bank of England base rate in the UK. We continue to expect a very favourable low base rate regime for the next two to three years, which will continue to support demand for residential property.
RETURN OF
OVERSEAS BUYERS
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We expect increased interest from overseas buyers as travel restrictions ease through 2021. Overseas interest in commercial property is already evident, reflecting an undervalued currency and attractive yields. Commercial estate agent Colliers reports that £3 billion was invested in UK commercial property in March, with overseas investors accounting for half of the assets. We expect trends in residential to follow commercial through 2021.
BUYERS AND SELLERS
EMERGE FROM LOCKDOWN
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As restrictions ease through the year, the previous ways of transacting are likely to re-establish themselves. We expect that this will see an increase in new listings as seller reluctance over viewings recedes. The real estate sector has done well to mitigate the barriers put up during lockdown, and some of these innovations – such as remote viewings – could stick, particularly for overseas buyers.
STAMP DUTY HOLIDAY
EXTENTION WILL BOOST MARKET IN Q2
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The stamp duty extension and positive news on the easing of lockdown restrictions in March resulted in a surge in new instructions late in Q1. As a result, the number of prime properties under offer across London, a barometer for transaction levels in the coming months, hit 694 at the end of the first quarter. This is the highest number recorded since our index began and 3.1% higher than the previous record quarter in Q1 2020.
LOW INTEREST RATES
WILL SUPPORT DEMAND
The prospects for economic growth in 2021 have led to higher inflation expectations and rising bond yields (that is, falling prices). However, there’s no sign of any change in the Bank of England base rate in the UK. We continue to expect a very favourable low base rate regime for the next two to three years, which will continue to support demand for residential property.
RETURN OF
OVERSEAS BUYERS
We expect increased interest from overseas buyers as travel restrictions ease through 2021. Overseas interest in commercial property is already evident, reflecting an undervalued currency and attractive yields. Commercial estate agent Colliers reports that £3 billion was invested in UK commercial property in March, with overseas investors accounting for half of the assets. We expect trends in residential to follow commercial through 2021.
BUYERS AND SELLERS
EMERGE FROM LOCKDOWN
As restrictions ease through the year, the previous ways of transacting are likely to re-establish themselves. We expect that this will see an increase in new listings as seller reluctance over viewings recedes. The real estate sector has done well to mitigate the barriers put up during lockdown, and some of these innovations – such as remote viewings – could stick, particularly for overseas buyers.
STAMP DUTY HOLIDAY
EXTENTION WILL BOOST MARKET IN Q2
The stamp duty extension and positive news on the easing of lockdown restrictions in March resulted in a surge in new instructions late in Q1. As a result, the number of prime properties under offer across London, a barometer for transaction levels in the coming months, hit 694 at the end of the first quarter. This is the highest number recorded since our index began and 3.1% higher than the previous record quarter in Q1 2020.
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Spotlight on Hampstead Village
chapter 04
Spotlight on Hampstead Village
![2BHRT7J]( "2BHRT7J")
With buyers looking for green space and a more relaxed atmosphere after lockdown, Hampstead Village continues to be one of London’s most desirable locations.
Source: LonRes / Land Registry - Properties sold in last 10 years (streets with three or more sales recorded), April 2021.
Pick of the streets
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Top five streets in the
Hampstead Village area
Street
Average sale price
Average £ per square foot
Wadham Gardens
£6,511,875
£1,762
Telegraph Hill
£6,033,333
£1,170
Hampstead Square
£5,910,000
£2,084
Greenaway Gardens
£5,661,625
£1,478
Perceval Avenue
£4,771,667
£1,634
Source: LonRes / Land Registry - Properties sold in last 10 years (streets with three or more sales recorded), April 2021.
PROPERTY MARKET BUSTLES AS BUYERS LOOK FOR SPACE
This time last year, inner-city flats were still topping the bill. But as buyers consider life after lockdown, properties in NW3 are being snapped up more quickly and sellers are getting nearer the asking price than in other areas of London.
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Difference between the average time from listing to final sale between the first three months of 2021 (146 days) and the same period in 2020 (197 days). The overall average for all of prime London was 154 days in Q1 2021.
NW3
Prime London as a whole
Q1 2020
-9.0%
-8.1%
Q1 2021
-7.9%
-8.6%
The average discount on initial asking price
Sellers have been able to sell at closer to the asking price as Hampstead’s appeal has increased. This difference between discounts between 2021 and 2020 amounts to an extra £55,000 on a £5 million property.
In addition, discounts are now narrower in Hampstead than prime London as a whole, a reversal of the position last year.
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Difference between the average time from listing to final sale between the first three months of 2021 (146 days) and the same period in 2020 (197 days). The overall average for all of prime London was 154 days in Q1 2021.
The average discount on initial asking price
NW3
Prime London as a whole
Q1 2020
-9.0%
-8.1%
Q1 2021
-7.9%
-8.6%
Sellers have been able to sell at closer to the asking price as Hampstead’s appeal has increased. This difference between discounts between 2021 and 2020 amounts to an extra £55,000 on a £5 million property.
In addition, discounts are now narrower in Hampstead than prime London as a whole, a reversal of the position last year.
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