More optimistic start to 2017 for prime central London market

More optimistic start to 2017 for prime central London market [Image: georgeclerk via iStock]

Sales and lettings markets in prime central London have begun 2017 more optimistically, according to new research.

Estate agency JLL has revealed that both markets suffered from falls in price and an overhang of properties on the market last year, but after price adjustments from Stamp Duty changes having been largely absorbed, this year’s outlook is more promising.

JLL emphasised that with Brexit negotiations still ahead of us, 2017 will be a year of market stabilisation. We expect prices to remain steady but forecast activity to increase.

The fourth quarter of 2016 appeared to show a boost to sales, with the number of transactions increasing by 36 per cent compared with the previous quarter. In addition, the weakened pound encouraged international buyers to return to the UK market.

JLL’s research found that, on average, prices fell again in Q4 but that the drops in price have fallen as 2016 went on. The agents found that the average price fall of 0.1 per cent in Q4 was an improvement on the 0.2 per cent decrease seen in Q3. It was a marked improvement from the 1.1 per cent fall in Q1 and 0.9 per cent drop seen Q2.

JLL said it expects transaction levels to be notably higher in 2017 compared with 2016 and predicts that prices will remain broadly flat during the year ahead.

On average, it was found that rental values across prime central London fell by 3.1 per cent during Q4 2016. This was the fourth consecutive quarterly fall and has left rental values 8.6 per cent lower during the course of 2016.

JLL has forecast stable rental values during 2017, then rising from 2018. Higher underlying consumer price inflation is likely to put some upward pressure on rents.

Richard Barber, director of residential agency at JLL, said: “Q4 saw a marked upturn in transactional volume throughout prime central London with some notable high value sales.

“Whilst some values have undoubtedly slipped throughout 2016, it was interesting to note that exceptional properties were still commanding high rates per square foot and on a similar level with 2014 peak values.”