The prime property market in London appears to be holding up relatively strongly in the face of rising interest rates, according to an index.
House prices in prime central London in the third quarter of 2023 were typically 1.2% lower than a year earlier, estate agent Savills reported.
Property values across London’s prime property market generally were down by 2.1% annually in the third quarter of this year.
Savills’ definition of prime properties is those in the top 5% to 10% by value in any given market.
Earlier this week, another index, from Nationwide Building Society, indicated that across the UK housing market generally, prices remained 5.3% lower than a year earlier in September. This was the same as the annual percentage drop that Nationwide had recorded in August.
Not all prime markets are underpinned to the same extent by reserves of cash and equity— Frances McDonald, Savills
Mortgage rates have jumped in recent months amid rises in the Bank of England base rate, although for some affluent buyers who are not reliant on borrowing to fund a house purchase, this may be less of an issue.
Frances McDonald, director, Savills residential research said: “Mortgage borrowing is largely discretionary in the prime central London markets, and so we saw an uptick in borrowing when interest rates were at historic lows during the pandemic.
“Now these markets are benefitting from affluent buyers’ ability to transact with cash or low loan-to-value ratios as rates have risen.
“But not all prime markets are underpinned to the same extent by reserves of cash and equity.
“Prime family house markets of south-west and west London, in particular, are typically more highly leveraged and deals here are becoming increasingly price sensitive.”
With fewer homes coming onto the market, buyers are facing less choice than they were a couple of months ago, which in turn is putting a floor under prices— Aneisha Beveridge, Hamptons
Meanwhile, estate agent Hamptons reported that, across all property types and values, the average home sold in England and Wales in September achieved 99.1% of its final asking price, up from 98.5% in August. This meant that sellers achieved closer to their asking price than in any month since October last year.
Hamptons’ data is taken from hundreds of branches which form part of its parent company – the Connells Group.
Aneisha Beveridge, head of research at Hamptons, said: “With some sellers still holding out for last year’s prices, it’s the number of homes changing hands rather than their price that’s bearing the brunt of the slowdown.
“Stock levels look to have peaked, having surged late last year on the back of the rising time it took to sell. But with fewer homes coming onto the market, buyers are facing less choice than they were a couple of months ago, which in turn is putting a floor under prices.”
