Prime London sales market during lockdown: the numbers
PCL sales index April 2020: 5,527.8
POL sales index April 2020: 267.0
2 minutes to read
There are two trends worth noting in prime London sales markets as the UK enters the eighth week of lockdown.
First, the number of lost sales due to Coronavirus is growing. While one in five deals underway when the pandemic struck have fallen through, transaction numbers in the week ending 2 May were 54% below their five-year average.
However, the second trend is that more buyers are starting to prepare for life after the lockdown. The equivalent drop in exchanges in the first week of lockdown (week ending 28 March) was 74%.
This weekend, Prime Minister Boris Johnson indicated how the UK would start to relax restrictions, which could include the resumption of physical viewings under social distancing guidelines.
The same pattern is visible when we examine the number of new buyers registering. In the week ending 28 March, the number was 77% below the five-year average in London. By the week ending 2 May, that had narrowed to a decline of 60%. The number of new prospective buyers has doubled over this period.
Indeed, there is clear evidence that pent-up demand has continued to build in London.
Based on data for 5 May 2020, the total potential spend of all buyers registered with Knight Frank in London was £52 billion. That compares to £43.5 billion on the same day in 2019, which represents a 20% increase.
Meanwhile, the number of web hits for sales properties in London was 12% below the five-year average in the week ending 2 May. That compares to a 42% decline in the first week of lockdown.
Furthermore, while the number of new buyers registering was down 60% in the week ending 2 May, the number of new properties placed on the market was down by 74%. In the four-week period to 2 May, supply fell by more than demand each time, a trend that will act as a brake on price declines.
That said, the difference between asking prices and exchange prices is widening. In April 2020, the average sale price was 94% of the original asking price, down from 97% in January, which was a time when the effects of the so-called Boris bounce started to take hold.
This reflects the ad hoc renegotiations that are taking place between buyers and sellers, which are not based on comparable evidence.
Knight Frank’s prime central and outer indices for April are broadly flat over the last 12 months, reflecting how thin trading conditions remain. The index in prime central London fell 0.3% between March and April, leaving the annual decline at 1.3%. It was the first time the annual decline had widened in more than a year.
This pattern reflects what the sales evidence is showing. The average £PSF in April 2020 was £1,054, marginally down from a figure of £1,057 in April 2019.