By Prime Resi.
We’re sharing our insights into the prime cental London property market this week in PrimeResi, warning that it will take a while before vendors accept that buyers are much more price-sensitive at the moment.
Prime Central London (PCL) transaction levels look set to stay low over the coming months, as buyer and seller expectations remain misaligned. That’s our assessment as we report a “very sticky” start to the summer market, with buyers now far more price sensitive than they were at the height of the pandemic.
In our view, it will take time for vendors to fully accept this shift and begin pricing homes — particularly at the lower end of the PCL scale — at levels that genuinely attract interest. Until that recalibration happens, much of the market looks set for a standoff.
Sellers Are Slow to Adjust
Managing Partner Camilla Dell explains that this lag between a cooling market and sellers adjusting their expectations is a familiar pattern:
“I have found that there tends to be a long delay, in a market which is slowing, for that message to sink in for sellers that they need to be realistic about prices. We are just starting to see prices coming down a bit – even where we have been previously told that a seller is in no hurry – and some sellers are becoming more amenable to negotiation.”
While there’s no evidence of the double-digit price falls some were forecasting at the start of the year, we’re seeing a highly selective market — one that feels closer to pre-pandemic conditions than to the volatility of the past few years.
Buyers Are Present, But Choosy
In our latest update to clients, we noted that buyers are still active in the market, particularly cash buyers at the top end:
“Buyers are still out there, particularly cash buyers operating at the top end of the market, but despite healthy budgets they are not willing to pay over the odds for properties. They are also taking the time to be very choosy when it comes to location and specification. As a result, while prices are holding firm, the number of deals being made is the indicator which has taken a hit.”
Normalisation, Not Crisis
Partner Caspar Harvard-Walls believes the gloomy 2023 forecasts that circulated earlier in the year did more to unsettle buyer sentiment than reflect reality:
“Those 2023 forecasts were always ridiculous. The problem was that they did affect buyer confidence and sentiment.”
He points to a broader normalisation now underway, as interest rates move off historic lows and the pandemic-era race for space fades as a driving force:
“We were just spoiled during the Covid-19 market… It was a false reality, a completely unusual set of circumstances. Now buyers are saying hold on, that property is the wrong price, and that is how it should be.”
A Two-Tier Market
The latest LonRes figures underline the slowdown, with PCL sales activity in April down 34.7% year-on-year and the year-to-date total off by more than 24%; properties under offer were down 11% annually. Yet the top of the market tells a different story — agreed sales above £5m rose 26% year-on-year and now sit more than 50% above the average recorded between 2017 and 2019.
Dell attributes this split to the profile of today’s active buyer:
“The people who are buying at the moment are wealthier clients who are less reliant on mortgage finance. They include overseas buyers who are still buying in London because of the weak pound, and they tend to have bigger budgets.”
The Wider Forecast
Strutt & Parker has maintained its 2023 sales market forecasts, citing renewed confidence and signs of recovery across the South East, East of England and Prime Central London. Nationally, the firm expects average UK house prices to move within a range of 0% to -5% this year, with Prime Central London forecast at -3% to +3%. Over a five-year horizon, Strutt & Parker’s analysts still expect prices both in PCL and nationally to rise by 10–15%.
Our Take
The current market rewards patience and realistic pricing. Buyers — particularly those with substantial cash resources — remain willing to transact, but only at the right price and for the right property. Vendors who adjust expectations sooner rather than later are likely to see the strongest results in what remains a highly selective Prime Central London market.
Read the full article here.