Activity levels in London’s high-end real estate market stabilized in the year to March, helped by pent-up housing demand and a weaker pound, according to a report Tuesday from Knight Frank.
This stabilization follows a long period of idleness from many buyers who were waiting on the sidelines as political uncertainty, property tax increases and falling prices affected the market.
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Now, as needs-based buyers move from the sidelines, they are further encouraged by asking price reductions as sellers price to compensate for higher rates of stamp duty, the report said.
The number of new prospective super-prime buyers registering with estate agents in the first three months of the year was 7% higher than at the same time last year.
And while the number of transactions in the year to March was 9% lower than the 12 months previously, it’s still an improvement compared to annual falls of more than 20% registered throughout 2016 and the first half of 2017, according to Knight Frank.
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"Though London has had a tough time recently, it is seeing renewed vigor," said Paddy Dring, head of global prime sales at Knight Frank, in the report. "The effective discount provided by a weaker pound has certainly helped some buyers seeking value."
"There is a continued focus on safe haven investments for the long term with increasing focus on income generation and longer-term returns," Mr. Dring added. "Although political risk remains with us, economic fundamentals underpinning the market remain strong, with interest rates at an all-time low and global economic growth improving."
The average discount between the asking and the achieved price for super-prime properties—defined as properties priced at £10 million (US$13.28 million) and up— in the first quarter of 2018 was 10%, compared to 6% in 2016 and 4% in the same period in 2015. Knight Frank did not give the average discount for super-prime properties in 2017.