Q1 – 2024 | London Property Market Update

The first three months of 2024 marked a relatively quiet period in London’s luxury property market, characterised by limited activity and slight declines in average asking prices. Compared to the same period last year, there was a noticeable decrease in transactions, with LonRes data indicating an annual change in acquired values of around -3.3% and a 10% drop in sales volumes compared to the first quarter of 2023.

Prime Properties

However, the market for properties valued over £5 million experienced a 1.3% increase in transactions compared to the same quarter the previous year. This specific market segment, when compared to the years 2017-2019, has grown by over 28%. Additionally, the stock for these high-end assets, according to LonRes data, has increased by approximately 26.5% compared to the previous year.

National and International Factors

The limited number of offers recorded in the first three months of 2024 suggests that activity will remain subdued in the coming months. When analysing the dynamics of any property markets, including London’s, it is essential to consider two key elements that influence long-term prospects: domestic and international factors.

Domestically, the upcoming General Elections represent a significant moment that is likely to heavily influence future predictions. Internationally, the potential for increased involvement by Western nations in the Middle Eastern conflict could heighten the risk of volatility in global financial markets, including real estate.

The London’s high-end market has shown, in past similar circumstances, its ability to act as a “safe haven”, demonstrating remarkable resilience. The much-anticipated Budget dated 6th March 2024, may have contributed to a weak March. Additionally, although changes to Multiple Dwelling Relief (MDR) and non-dom taxation affect a tiny segment of the market only, even in central London, they still negatively impact overall sentiment.

Thinking Aloud

March 2024 also marked the fourth anniversary of the first Coronavirus lockdown. During and after the pandemic, the rush to acquire properties with more space, including outdoor areas, became the dominant trend. It is worth noting that in the past ten years, houses have consistently gained greater appeal and higher asking prices, not only from end-users but also from investors eager to acquire Freehold units to rent out under HMO regulations.

Naturally, this shift cannot be entirely attributed to changes in post-pandemic buyer preferences; other factors may also be at play that reduce demand for flats Leasehold, in general, have received some negative feedback in recent years due to rising service charges and issues with building safety compliance, but the timing of the observed change since mid-2020 suggests a strong cause-and-effect relationship.

Case Studies

This is certainly an ideal time to conduct meticulous searches and identify properties for sale, either on the open market or off-market, that present intrinsic potential and a strong desire to be bought and sold. This was the case in some recent searches conducted for an investor client of mine, focused on acquiring well-maintained assets located in elegant buildings and very central areas. Specifically, the investor chose two one-bedroom units, located in Prime Central London, just a short walk from the UK’s and the world’s top universities. Both units were rented out very quickly, with a gross annual yield of 5.6% and 5.8%. An interesting aspect of one of these property acquisitions was the applied price reduction, which ended up being around 9% off the initial asking price.

If you are considering to invest, I would love to assist you. Regardless of the purchase price you manage to negotiate, my advice is to always buy properties with strong potential and the kind of quality that can withstand any market condition.