Ever since the EU referendum in 2016 the London property market has been stumbling along, with low growth and a sense of depression and uncertainty as the spectre of Brexit looms.
The data from surveys and the official records of estate agencies and other organisations working in the property sector have been telling a common picture over this period of gloom, with falling demand and a reluctance by many investors to commit capital to new acquisitions or construction projects.
However, new figures from lettings agency JLL for the prime central London area in the second quarter of 2018 indicated a more nuanced picture.
At one level, it might appear to be just a continuation of a bad news story, with the number of lettings transactions down by 15 per cent on the same period in 2017.
However, while prices of rental property worth over £5 million fell 1.8 per cent, this decline is far from the worst seen in recent years, which occured in the third quarter of 2015 (5.9 per cent). Much more encouraging, however, is the fact that prices in the £2 million to £5 million bracket rose by 0.4 per cent, while those worth under £2 million increased by 0.2 per cent. This meant an overall price rise of 0.1 per cent. Slight though the increase may be, it is the first time in four years that prices have increased in successive quarters.
Moreover, JLL said that despite the fall in transactions, the lower end of the market is “outperforming in rental growth terms”. Indeed, there has been a 0.1 per cent increase in rents in both quarters so far in 2018. Again, this is modest, but the previous two and a half years had seen a 13 per cent drop.
Commenting on the report, director of the firm Richard Barber said: "Our report demonstrates an increase in confidence in the prime central London market, but Brexit, the prospect of a Labour government and punitive stamp duty still has its impact.
"That said, for those with a plan of living in London more permanently, it is business as usual, and this is reflective in the type of property that is being sold. Smaller homes of two to three bedrooms and flats under £5 million are more popular."
None of this indicates a new boom, but it may well indicate that at least part of the market has bottomed out, irrespective of ongoing political and fiscal concerns. This may have two implications for investors; firstly, the data implies that the best kind of property to focus on now is towards the middle and lower end of the market. Secondly, as growth in these sections is real but slow, any investment may be best considered as a long-term plan.
That would tally with the thinking of many property industry experts. Such commentators include the chairman of estate agency Knight Frank, Alistair Elliott, who told the South China Morning Post last month that the situation is nowhere near as bad as some predicted two years ago, and that a long-termist approach in London will still work.
He remarked: "Buying to sell in six or 12 months time, I would be cautious. Buying to sell in five or ten years, I'd say: carry on."