London Property Market Rebounding Unevenly from COVID-19
International property consulting firm Knight Frank is reporting this week that it has been no ordinary summer for London's property market.
Prices continue to recover from the depths of the lockdown in April 2020, with increases recorded in areas with more family houses and outdoor space. In fact, the problem in locations like Islington and Dulwich is not enough supply to meet the surge in demand since the market re-opened.
Meanwhile, prices in prime central London are flat or marginally down as international travel restrictions present logistical hurdles. As the rest of the year unfolds, all eyes will remain on external events, namely the race to develop a vaccine and the health of the UK jobs market. Prices in parts of outer London have begun to recover from their lockdown low-point in April 2020.
Areas including Wandsworth, Richmond, Dulwich and Islington recorded monthly increases in July as they benefited from a surge in demand from families seeking more outdoor space.
Property prices outside of London have been more resilient since the market re-opened in mid-May as buyers looked for more outdoor space. Values rose in the £5 million-plus country house market due to the lack of supply and the ability of buyers in higher price brackets to transact quickly. Parts of London with more green space are now benefitting from the same effect.
"The problem is not enough supply of family houses in some parts of London," said Tom Bill, head of UK residential research at Knight Frank. "Demand for outdoor space has surged and while we can't know how long it will last, it means sealed bids for family houses are back."
While prime central London has also recovered from the depths of the lockdown, the rebound is not as marked.
Average prices in prime central London fell 0.1% in July, taking the quarterly fall to 1.7%. Areas such as Mayfair, Knightsbridge, Kensington, Chelsea and Notting Hill were flat or marginally down in July.
In prime outer London, the quarterly decline was 1.1% after a monthly rise of 0.2%. Average prices in both PCL and POL were down 5% in the year to July.
Lower-value markets have also benefited from the effect of the stamp duty holiday, which was introduced at the start of July by the Chancellor. We will be analysing the impact in more detail in the coming days.
Across the capital, activity levels are higher than normal during the traditionally quieter summer holiday period.
The number of offers accepted in the week ending 1 August was 132% higher than the five-year average. It was the biggest weekly increase since the market re-opened in mid-May and highlights how seasonal patterns of activity have been changed by the Covid-19 pandemic in 2020.
Similarly, the number of new prospective buyers registering in London was 80% higher than the five-year average in the same week, while instructions to sell were up 40%.