Prime market remains resilient as activity returns: Q2 2020 Prime London analysis

10 July 2020

  • New instructions dropped 34% in the second quarter this year compared with last.  But as the sector re-opened more new stock reached the market in June.  New instructions in June were up 29% on June 2019. (see chart 1 on download)
  • Transaction volumes more than halved in Q2 2020 compared to the same three months a year ago, with 53% fewer exchanges recorded. (see chart 2 on download)
  • The number of properties going under offer, often a more immediate indicator of demand, recovered (on the previous two months) in June 2020, with just 5% fewer properties going under offer compared with the same period a year ago. (see chart 2 on download) 
  • Achieved prices in Q2 2020 fell 0.5% on the previous quarter but were 1.2% higher than in Q2 2019. (see chart 3 on download) 
  • Average discounts achieved off initial asking prices rose marginally in Q2 2020 to 8.9%, up from 8.4% in Q1 2020.  However, they remain below Q2 2019 (10.1%). (see chart 4 on download)

Latest analysis of the prime London housing market 

Commenting on the analysis, Marcus Dixon, head of research at LonRes said:
“With half of the second quarter spent in lockdown we have seen far fewer exchanges and new listings, meaning analysis of our prime London data is more challenging than usual.  And with little activity from mid-March to mid-May the pausing of the housing market will impact our statistics for some time yet. 

“Transaction volumes remain at around half the level we saw a year ago, reflecting the time taken to progress a sale from the acceptance of an offer to exchange of contracts.  But there are signs of life in the prime London housing market.  Despite having emerged from a period of lockdown, the number of properties going under offer in June was just 5% below volumes seen a year ago.

“Prices too appear more resilient than many had expected.  Following a strong first quarter we saw average prices fall 0.5% in the second quarter, but they remain 1.2% higher than values achieved a year ago.  Discounts too rose marginally over Q2, averaging 8.9% off initial asking prices, but remain lower than at the same point last year.”

New instructions  
There were 34% fewer new instructions across our three prime catchments in Q2 2020 compared with the same three months a year ago.  In April, when lockdown was in force, there were 80% fewer new listings.  But in June, the first full month since lockdown restrictions were eased, new instructions increased across prime areas of London.  In June 2020 we saw a 29% increase in properties reaching the market for sale compared with the same month a year earlier. 

Transactions and under offer
The time taken from offer to exchange means that we were not expecting to see a significant increase in transaction volumes emerging so soon after lockdown restrictions were eased.  In Q2 2020 transactions across prime London were down 53% on Q2 2019.  And were 47% lower in June 2020 compared to the same month a year ago.   

The number of properties going under offer, often a more immediate indicator of demand, recovered in June 2020, with just 5% fewer properties going under offer compared with the same period a year ago.  This suggests that exchanges will increase in the coming months as these deals progress.

Prices and discounts
With fewer than half the usual number of transactions recorded in the second quarter, analysis of prices is always going to be more difficult.  However, the latest figures show achieved prices were 0.5% lower than in Q1 2020 and 1.2% higher than in Q2 2019. 

While price growth has slowed, down from 4.8% in Q1 2020, we are not seeing significant discounting or achieved prices falling significantly. 

There are few forced sellers in prime London which means offers significantly below asking price are unlikely to be accepted.  

Comparing average discounts achieved off initial asking prices shows that discounts rose marginally in Q2 2020 to 8.9% from 8.4% in Q1 2020.  However, they remain below Q2 2019, when average discounts were running at 10.1%.

 

*Prime London analysis includes properties within the following prime areas:

  • Prime Central London: SW1Y, SW1X, SW1W, SW1A, SW3, SW7, SW10, W1S, W1K, W1J, W8
  • Prime London: NW1, NW3, NW8, SW1P, SW1V, W1T, W1H, W1U, W1G, W1W, W2, W11, W14
  • Prime Fringe: SE1, SE11, SW4, SW5, SW6, SW11, W4, W6, W9, W10
     

For further information please contact:
Alison Blease, Director PR, LonRes
E: alison.blease@lonres.com 
T: 077696 77825