The latest update on the prime central London market from agency Knight Frank warns that it’s still not business as usual, as Covid still impacts transactions.
The firm warns that while international travel to the UK became easier from early October, there is still a degree of caution among some overseas buyers.
Additionally, there is still an unusual pattern in what buyers want.
For example, demand for houses spiked at the start of the pandemic as flats fell out of favour. Now, with the prospect of further lockdowns tentatively fading, apartments are back on the radar of buyers in central London - but not all apartments, it seems.
Knight Frank says flats with outdoor space like a roof terrace or those that are located on garden squares are in higher demand. Properties with space to work from home and amenities such as gyms and meeting rooms are also more popular, including completed new-build developments.
“For flats that don’t tick these boxes, it’s still a harder sell” cautions the agency.
Other buyers are being deterred from taking on properties that require building work because of construction supply chain disruptions and spiralling costs.
Meanwhile, competition for the most in-demand properties has intensified and as a result the supply of houses has fallen to historically low levels in many prime areas including Notting Hill and Chelsea.
The agency hints that this makes agents’ jobs harder too. It says: “For buyers and sellers in prime central London wondering how much a property is worth, it is a slightly confusing and patchwork picture that increasingly depends on neighbourhood, property type, amenities and state of repair. Underlining this point, the difference between the highest and lowest sale prices has widened over recent months.”
The difference between the lower quartile - that is, the price point below which the bottom 25 per cent of properties transacted - and the upper quartile (the corresponding top 25 per cent) rose above £1,000 per square foot in July and has stayed there.
The average difference throughout 2019 was £777 and £675 in 2020.
Further underlining the point, while prices for houses in prime central London rose 1.3 per cent in the three months to October, the equivalent increase for flats was 0.2 per cent. The last time this difference was wider was in August 2009.
“The market is getting more binary and you are seeing wider spreads for apartment prices in the same building depending on the floor and how much outdoor space they have” explains Stuart Bailey, head of prime London sales at Knight Frank.
“On top of that, refurb costs have doubled over the last year in some cases, due to the shortage of materials and labour, which means taking on a project has become more of a consideration.”