What can we expect from the prime central London market in Q3?

During the first few months of 2021, prime central London values were 20.5% below their 2014 peak, making this period a worthwhile time to buy property, as top end transactions rose significantly. After a positive start to the year, what can we expect from the market in the second half of 2021?

After being recognised as a buyer’s market during the first half of the year, prime central London prices are slowly increasing, and the eventual relaxation of international travel rules is expected to result in a price boost.  

It’s no secret that the pandemic has encouraged many buyers to reconsider what they truly want in a home, whether that’s an outdoor terrace, a new office space or a larger property to accommodate flexible working arrangements for a healthy work-life balance.

These lifestyle drivers have proven increasingly important during a time of such turbulent uncertainty, and they don’t look to be disappearing any time soon, despite a steady return to the office for many London residents.

With most of the population working from home at some point during the pandemic, clients became more aware of their quality of life, and subsequently how their homes impact upon their wellbeing. According to Coutts, areas offering larger homes and green space were highly sought after during Q1, reflected in increased sales across key areas such as Chelsea, Notting Hill and Holland Park.

During lockdown, a number of high-net-worth individuals saw the potential in low property prices as an investment opportunity, paired with the stamp duty holiday, which also gave the market a boost.

Unsurprisingly, the demand for houses has outweighed the demand for flats and apartments, and there has been growing interest in freehold houses in prime central London during the past year, as opposed to leasehold spaces. With the UK still learning to adapt to the ‘new normal’, this increased demand is expected to continue for the foreseeable future.

In March 2021, it was reported by Knight Frank that the number of transactions in prime central London was the highest it has been since March 2016, as concerns about COVID began to gradually ease thanks to a robust vaccination programme and the successful lifting of restrictions. This led to the highest number of exchanges, offers made, offers accepted and new prospective buyers registering with Knight Frank, in 10 years in London. So, what does that mean for Q3?

As we move into the second half of the year, activity in the market is certainly maintaining pace and the future is looking promising. Buyer confidence is continuing to grow, as Cory Askew, Head of Sales at Chestertons predicts the property market will remain buoyant as buyers are eager to find a deal before property prices rise further.

Although it is now coming to an end, the stamp duty holiday has also incentivised buyers and positively influenced the market during the last year – particularly leading up to the holiday ending. In June 2021, Chestertons reported 70% more sales transactions than in any single month before, as buyers rushed to beat the taper deadline.

And with international travel set to return in the next few months, it’s highly likely that there could be a surge in overseas buyers, particularly in the areas of Knightsbridge and Mayfair.

Edward Aldersley, managing director of Aldersley London, said: “At the moment we're seeing a real mix of international buyers interested in prime central London property, including high net worth individuals from Singapore, India, UK and South Africa, and the changing lockdown measures will see a rise in foreign buyers re-entering the London market.”

“The stamp duty holiday coming to an end definitely resulted in a rush to complete purchases, as buyers were urged to act quickly. We recently had a client exchange and complete a stunning property in Notting Hill within 24 hours of the deadline.”

More buyers returning to the capital could have an unleashing effect on the prime central London housing market, meaning increased competition, which may result in bidding wars and sealed bid scenarios. As the world begins to reopen, activity will continue to pick up and London will remain one of the top global prime markets.

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