Pent Up Demand by London Property Buyers Due to COVID-19 Tops £52 Billion
London Housing Transactions Down 54 Percent in May 2020
International property broker Knight Frank says that as of May 5, 2020, the total potential spend for all residential buyers registered with Knight Frank in London was £52 billion. That compares to £43.5 billion on the same day in 2019, representing a 20% increase. The data also shows that the number of lost sales in London due to Coronavirus is increasing. While one in five deals underway when the pandemic struck are still progressing, transaction numbers in the week ending May 2nd were 54% below their five-year average. However, a secondary 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 March 28th) was 74%.
The same pattern is also visible when examining the number of new buyers registering. In the week ending March 28th, the number was 77% below the five-year average in London. By the week ending May 2nd, that had narrowed to a decline of 60%. The number of new prospective buyers has doubled over this period.
Meanwhile, the number of web hits for sales properties in London was 12% below the five-year average in the week ending May 2nd. 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 May 2nd, supply fell by more than demand each week, a trend that will act as a brake on price declines.
"That said, the difference between asking prices and exchange prices is widening" according to Tom Bill, Head of London Residential Research at Knight Frank. "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.