Spring market stalls as buyers wait for price drops -...

The prime London market appears to be lacking its usual spring buzz as buyers wait for prices to drop research suggests.

Analysis of the prime London market by property data company LonRes shows sales activity remained low in April.

Agreed sales for the month were at a record low, excluding the lockdown-affected April 2020, and down almost 35% annually.

However, sales taken over the course of the year to date are only 1.4% below the pre-pandemic average between 2017 and 2019.

Across all prime London areas, the average discount to asking price rose to 9.1%, the highest in more than three and a half years, LonRes said.

Around half the properties that sold in April saw their asking price reduced.

Additionally, the number of properties under offer, a lead indicator, was 11.7% lower than a year earlier, suggesting that activity is unlikely to increase significantly over the coming months, LonRes said.

In some positive data, new instructions in April were up by 8.8% on April last year, taking the year to date rise to 9.2%.

The number of properties being withdrawn from sale is also well below its longer-term trend level.

Average values across prime London also showed a slight fall in April, with an annual decline of 0.9%.

Prime inner London was the best performing area, recording annual growth for the first time in six months where it was up 3.5%.

The market is looking better at the top-end though, with £5m+ sales volumes in April up 26.1% annually and 58.2% above the April pre-pandemic average.

The number of properties going under offer in April also grew, 13.6% up on a year earlier.

The growth in supply of homes for sale in this market slowed in April. New instructions were slightly down by 1.4% in April compared to a year earlier, although the current level is significantly above historical trends – the number of £5m+ homes currently on the market is the highest in the 10 available years of data.

Commenting on the findings, Anthony Payne, managing director of LonRes, said: “As the peak selling season enters its stride, there are continued signs that the wider Prime London housing market is slowing. Anecdotally agents are telling us that there is no shortage of buyers and those buyers have money to spend.

“However, the housing market is a sector underpinned by confidence and at the moment sellers are referencing prices of yesteryear, while buyers are looking to a future in which they expect prices to fall. There’s a gap between the two, that is causing the market to stall.

“For those vendors who fail to recognise the true value of their home in today’s market, the only path is one that leads to a downward price drift. Small price reductions that edge towards the true value of a property frequently result in a bigger reduction later down the line.

“Our data shows, new instructions or properties coming up for sale are on the rise, which for buyers means more choice. It’s a competitive marketplace, which for anyone seriously wanting to sell, means competitive pricing. Buyers have time and indeed are taking the time, to sit it out.”