Post on 20-Jun-2022
PRIME LONDON
MARKET UPDATE
June 2021
June 2021: London Prime Market Update
The market outside of London continues to dominate the headlines, with
double-digit annual growth reported in many areas of the country. But,
with modest price falls in prime areas of the Capital, it is easy to
overlook the prime London market. A lack of overseas buyers able to
access the market has continued to impact central London, yet strong
domestic demand has meant activity so far this year has been brisk.
But in most areas of prime London, we are not seeing demand outstrip supply. Estate agents’
windows have, for the most part, stayed well-stocked, meaning prices have not seen the rapid
growth experienced elsewhere. Instead, overall prices remain 1.9% lower than the same period
a year ago, although sought-after family houses are performing better.
For lettings, the extension of current restrictions to late July could mean next month is quieter
than some would have hoped. Yet stock levels are falling. New lets so far this year are up and
rents appear to be recovering from their lows of early 2021.
Introduction
The number of
properties sold in the
first five months of
2021 is the highest
since 2014.
June 2021: London Prime Market Update
Sales market
Comparing this year with last has been difficult for a couple of months now, with the housing
market effectively closed from mid-March to late May last year due to the first national
lockdown. This means fewer annual comparisons than usual as we look further back to
assess how well the market is performing.
With plenty of activity, both in prime areas of London and further afield, new instructions
continue to rise. Comparing May 2021 with 2019 shows new instructions rose 33% and were
up 8% on the five-year (2015-2019) May average. Indeed, the number of properties listed for
sale has risen, compared with 2019 volumes, every month since June 2020.
New instructions
have risen compared
with 2019 volumes
every month since
June 2020.
June 2021: London Prime Market Update
A steady stream of new instructions means prime London is not experiencing the stock
shortages seen in some markets elsewhere in the country. This in turn has meant we have not
seen the rapidly-increasing prices and competitive bidding reported in some hotspots where
stock is scarce. Comparing the number of properties on the market at the end of May with
the same month a year ago shows stock levels to be 36% higher.
With the housing market only re-opening towards the end of May last year, sales activity this
year needed to do little to match 2020 levels. Indeed, the number of sales recorded in May
this year was 160% higher than 2020. Setting aside the annual comparison, the market
remained busier than both 2019 and the long-run average, up 21% on 2019 and 20% higher
than the May average between 2015 and 2019. Indeed, so far this year, the number of homes
sold (January to May) is at the highest level since 2014.
Yet despite there being only a small chance of completing before the new 30 June deadline
(there is of course the additional tapering, but savings are a maximum of £2,500 rather than
£15,000), we still saw more properties put under offer in May than both the 2019 and long-run
average. The number of properties put under offer were up 22% on May 2019 and 10% higher
than the 2015 to 2019 average.
New instructions, under offer and sales - May 2021
Source: LonRes
32%
28%
24%
20%
16%
12%
8%
4%
0
New instructions Under offer Sales
Compared with 2019 Compared with five-year (2015 to 2019) average
June 2021: London Prime Market Update
Double-click to add title
Change in achieved prices - January to May 2021 annual change
Source: LonRes
Comparing achieved prices so far this year between January to May shows falls of 3.3% in
prime central London (PCL) and 0.6% in prime fringe, with prices remaining the same in
prime London. Houses continued to outperform flats in all areas, with prime fringe seeing the
highest annual growth in achieved prices at 4.1%, compared with 1.9% in prime London and a
0.5% annual fall in PCL.
Comparing May alone, albeit with a month of lower transactions last year, shows an overall
fall in achieved prices annually of 1.9% across all areas of prime London.
Over the next 12 months agents appear optimistic on the outlook for London’s prime market.
Just 10% of LonRes subscribers surveyed expected prices would fall in the coming year, with
54% expecting an increase of up to 5% and 15% expecting prices would be more than 5%
higher at this point in 2022. On transactions too, the outlook was positive, 69% of
respondents were confident that activity would increase, against just 14% expecting falls.
5%
4%
3%
2%
1%
0
-1%
-2%
-3%
-4%
-5%
-6%
PCL Prime London Prime Fringe
Flat House All
June 2021: London Prime Market Update
Sales Agent Survey
The majority (67%) of our agents
expect London to outperform the rest
of the country over the next five years
Strongly agree Agree Neutral Disagree Strongly disagree
Over the next five years London house prices will outperform the rest of the
country
Source: LonRes Agent SurveySource: LonRes Agent Survey May 2021
June 2021: London Prime Market Update
The number of Londoners looking to leave the Capital has peaked for now
New instructions
Applicants from the UK
Applicants from overseas
Time taken to sell
Fall throughs
Gazumping
Asking prices
0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Increased Stayed the same Decreased
Change so far this year compared with the second half of 2020
Do you agree?
15.18%
59.44%
15.18%
8.89%1.30%
Strongly agree Agree Neutral Disagree Strongly disagree
Source: LonRes Agent Survey May 2021
Source: LonRes Agent Survey May 2021
June 2021: London Prime Market Update
14.70%
54.40%
20.60%
7.40%2.90%
Up more than 5% Up 1-5%
No change Down 1-5%
Down more than 5%
Agent expectations - next 12 months
25.74%
42.57%
17.82%
10.89%2.97%
Up more than 5% Up 1-5%
No change Down 1-5%
Down more than 5%
80%
70%
60%
50%
40%
30%
20%
10%
0
Investors Developers Owner-occupiers
buying a larger
property
Owner-occupiers
buying a smaller
property
Buying a second
home
Buying for son or
daughter
Increased Stayed the same Decreased
Change in level of demand so far this year
Source: LonRes Agent Survey May 2021
Source: LonRes Agent SurveySource: LonRes Agent Survey
Source: LonRes Agent Survey May 2021
Prices Transactions
June 2021: London Prime Market Update
With an extension to restrictions now running until 19 July, the influx of workers back into
central London looks to be delayed further too. This could mean a quieter early summer than
some had hoped.
Yet even with current restrictions in place, activity in the prime lettings market has increased,
with rents looking to have bottomed out and even started to rise in some areas.
Stock levels are now lower than they were at this point last year too, as fewer new
instructions reach the market to let. The number of new listings in May is down 20% on 2020,
23% on 2019, and 31% on the 2015 to 2019 average.
New lets fell marginally in May, down 2% on May 2019 levels, but so far this year activity has
increased. The number of properties let in the three months to May are up 9% on 2019.
Lettings Market
The number of properties let in the three
months to May are up 9% on 2019
June 2021: London Prime Market Update
Change in number of properties let by price band
Source: LonRes
Activity remains buoyant at the lower end of the market. In the three months to May the number
of properties let at up to £500 per week rose 50% on 2019 levels, against falls in all other price
brackets. Of course, lower average rents will have an impact here, as more properties now fall
within the lower bracket. Yet an increase in demand for smaller homes will also be a
contributing factor. So far this year the number of properties let with three or more bedrooms
has fallen 7% on 2019 levels, compared with a 10% rise in lets of properties with fewer than
three bedrooms.
Despite fewer large properties let, agents are still reporting a lack of houses reaching the
market. 70% of agents in our most recent LonRes Survey citing a scarcity of stock for houses.
This compares with just 35% of agents reporting a lack studio and one-bed flats.
A year ago rents had already fallen, down 13% on 2019 levels. But we have seen rents begin to
first stabilise and then record modest increases in recent months.
-30%
-20%
-10%
0
10%
20%
30%
40%
50%
60%
Up to £500 per
week
£500 to £750
per week
£750-£1,000 per
week
£1,000-£2,000
per week
£2,000+ per
week
All
Ma
rch
to
Ma
y 2
02
1 v
s.
20
19
March to May 2021 vs. 2019
June 2021: London Prime Market Update
Achieved rents - Annual change and change since Feb 2020 peak
Source: LonRes (peak rental value is the highest average monthly rent achieved in February 2020)
Rents are now 2.1% lower than in May 2020
and 14.8% below the peak in early 2020. This
is down from a low of 17.7% in February 2021.
Looking ahead, agents remain optimistic
about both new lets and achieved rents over
the next 12 months. Just 16% of agents
expected fewer new lets in the coming 12
months, with 44% of agents expecting rents
to increase by between 1% and 5% and a
further 24% expecting a rise of 5% or more.
-20%
-15%
-10%
-5%
0
5%
Jan-2
0
Feb-2
0
Mar-
20
Apr-
20
May-
20
Jun-2
0
Jul-20
Aug-2
0
Sep-2
0
Oct
-20
Nov-2
0
Dec-
20
Jan-2
1
Feb-2
1
Mar-
21
Apr-
21
May-
21
Change since Feb 2020 peak Annual change
June 2021: London Prime Market Update
Lettings Agent Survey
58.36%
34.73%
6.91%
More looking to sell About the same Fewer looking to sell
Change in number of landlords looking to sell investment properties
Studio/ 1 bed flats
2 bed flats
3+ bed flats
Houses
0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Scarcity of stock About right Too many on the market
Are there any property types which are under/ over supplied in your area?
Source: LonRes Agent Survey May 2021
Source: LonRes Agent Survey May 2021
Source: LonRes Agent SurveyJune 2021: London Prime Market Update
Change this year compared with second half of 2020
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0
New instructions Applicants Viewings Renewals Void periods Time taken to let
Increased Stayed the same Decreased
Just 6% of agents reported that their
landlords were increasing rents when
tenants renewed their contracts.
Source: LonRes Agent Survey May 2021
June 2021: London Prime Market Update
24.22%
43.54%
17.72%
12.91%1.60%
Up more than 5% Up 1-5%
No change Down 1-5%
Down more than 5%
Agent expectations - next 12 months
27.53%
34.83%
21.72%
13.01%2.90%
Up more than 5% Up 1-5%
No change Down 1-5%
Down more than 5%
68% of agents surveyed expected rents to
increase over the next 12 months. Just 15%
expected falls.
Source: LonRes Agent Survey May 2021
Achieved rents New lets
June 2021: London Prime Market Update
*The analysis for this report takes in the three LonRes catchment 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.
Marcus Dixon
Head of Research
LonRes
research@lonres.com | 020 7924 6622 | LonRes.com
This issue was produced in June 2021 using data to 31 May 2021
June 2021: London Prime Market Update