London luxury home buyers and sellers are making their way to the negotiating table, as the market shows signs of recovery from a post-Brexit and post-tax hike slump.
New homes on the market increased 11% in the first quarter of 2018 compared to a year ago, as sellers returned with more realistic price expectations, according to a report Tuesday from LonRes, a real estate data firm. Meanwhile, buyers also turned out in the first quarter, with sales of homes priced over £2 million (US$2.712 million) up 8% compared to the first quarter of last year.
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The return of inventory with more negotiability is likely to characterize the market moving forward, said William Carrington, co-founder of LonRes, in the report.
"For those minded to sell, then the expectation is to be prepared to negotiate with the buyer from the reduced price to start," Mr. Carrington wrote.
"Interest rate rises, changing circumstances and, finally, acceptance that the market has changed will mean that these properties will come back onto the market, and that is starting to happen now," he continued.
In the first quarter, the average home in a prime London neighborhood sold at a 10.8% discount off the initial asking price, according to the report, which tracks activity in 32 London postcodes dominated by high-end real estate.
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Despite the deep discounts, the £2 million-plus market saw an average sales price rise by around 4% in the first quarter. By contrast, the sub-£2 million market continued to see a decline in prices, which fell 6% in the first quarter, according to the report.
Postcodes in Mayfair commanded the highest prices in the first quarter. Home sales were the highest in postcode W1S, a neighborhood within Mayfair, trading for £2,961 (US$4,016) per square foot. The second most expensive neighborhood was W1K, an area of Mayfair along Hyde Park, where average sales price was £2,577 (US$3,495) per square foot.