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2022 was a mixed year for the prime London residential market. The first three quarters saw the continuation of the post-pandemic boom with rising prices and robust levels of activity. The number of properties put under offer and sold during these first three quarters were much higher (26% to 40%) than the levels recorded in the three years prior to the pandemic. However, the political turmoil and resulting financial market stress put a dampener on the market in the final quarter of the year. Despite the turmoil, prices rose to just below their previous peak during 2022 and the top-end of the market boomed while demand for houses fell slightly relative to flats.
Unfortunately, the turmoil of the final quarter hit and the prime London market was not immune from its effects. The political chaos of September-October led to a fall in market activity in the final quarter of the year as interest rates shot up and buyer sentiment weakened.
The number of properties put under offer and sold fell back to near the low levels recorded in the three years leading up to the pandemic. There was also an increase in fall throughs and price reductions as the market re-adjusted to these new conditions. It is still not clear if these conditions will continue into 2023 and, if they do, how long they will last.
Average prices across prime London continued their recovery during 2022 and thanks to a 4.4% rise across the year, average achieved prices per sq. ft. were just 1.4% below their previous 2015 peak. While prime London is less dependent on mortgages than other parts of the residential market, interest rates are still important.
The Bank of England’s decision to hike interest rates to a 15-year high is set to see mortgage payments rise for millions of homeowners. On 2nd February the Bank confirmed UK rates will rise for the tenth time in a row, to 4 per cent from 3.5, in a bid to control inflation after it reached a record 11.1 per cent in October.
After big increases in 2022, the price of the average property in January was down 0.6 per cent on December. Further falls are likely due to this interest rate rise for the tenth time in a row, as it will likely push mortgage rates up further. Higher mortgage rates tend to push house prices down as people are less willing to borrow money.
In the last quarter of the year, there were signs that flats were becoming relatively more desirable compared to houses. With rising energy prices and increasing interest rates, the relative attraction of flats increased – a positive sign for the prime London market given flats make up most of the housing stock in the area.
The top-end of the prime London market was the strongest part of the market in terms of activity during 2022. Properties sold at £5 million and above, might form a relatively small part of the prime London market at around 8% of sales, but it is this market that recorded the highest growth compared to the pre-pandemic average during 2022.
Sales across all price bands were higher than their 2017-2019 average during the year, despite the fall in the final quarter. The £1 million to £2 million market saw 23% more sales in 2022 than the 2017-2019 average while the £2 million to £5 million market recorded a 42% rise over the same period. But the highest price band (£5 million and above) was the one that recorded the biggest increase, with sales in 2022 63% higher than the average for 2017- 2019.
Contact Us
If you are considering selling your property or any residential property sales advice, please contact Nicholas Jaffray by telephoning: +44 20 3091 9311 or via email at: Nicholas@Jaffray-Estates.co.uk or visiting at: 42 Upper Berkeley Street, London, W1H 5QL.
Full details of all our current properties for sale can be found via the company website: https://www.Jaffray-Estates.co.uk/Properties/Sales
We look forward to hearing from you.
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