Cracks show in London property market as prime listings come out on top
London property transaction volumes have slumped and rental growth has slowed, but the capital’s prime property market remains robust according to a new report.
Annual rental growth across London slowed to 6.9 per cent in November, the slowest rate since September 2021, according to property analysts LonRes.
The prime London rental market is being supported by high wage growth in the finance and business sector, LonRes said.
While average wages have grown at a slower pace than rents since 2020, wages in the finance and business services have grown at a similar rate to rents – by around 30 per cent.
In comparison, inflation rose by 20 per cent over the same period.
Lets agreed fell by 6.7 per cent year on year, but LonRes noted that this may be because a large proportion of properties are being let without listing.
Overall tenant demand “appears relatively high for the time of year”, LonRes said. “The lettings market usually quietens down after the autumn rush and this year is no different.”
The market for houses worth more than £5m – 8 per cent of the total market – continues its three-year streak as the best-performing sector.
“The top end of the market continues to cool but relative to other sectors £5m+ is still the most active price band… the pipeline of potential sales looks strong with lots of homes going under offer in the past three months,” Gregori said.
Overall sales volumes were 28 per cent lower in November year on year and there was a 16.1 per cent increase in the number of properties going under offer.
However, “there are signs that buyer sentiment in the prime London sales market is improving“, LonRes said.
The number of enquiries from buying agents, for example, has tripled since 2019 and rose again in November.
LonRes expects sales activity in 2023 to be only slightly below the yearly average.