2023-05-23-莱坊-The_London_Review_Q2_2023_5页_1mb

London Residential Review Q2 2023

Prime London Sales Market

• London sales recovered post-mini-Budget shock, stabilizing.
• Sales activity normalizing after post-pandemic disruption (2021 saw a 91% drop in Heathrow arrivals).
• Prime Central London (PCL) prices ended 2022 with annual growth of 7%, easing from the peak 20% growth post-Stamp Duty Holiday (SDH). Prices dropped 1% YoY in March 2023, remaining 1% lower than March 2020.
• Prime Outer London (POL) prices were 2.4% higher YoY in March 2023.
• Sales volume remained relatively flat for PCL (+0.5%) and slightly down for POL, while instructions (indicating activity) rose 20% YoY for PCL.
• Apartment sales ratio reached 73% for Q4 2022, the highest level in three years.
• Knight Frank forecasts UK house prices down 10% cumulatively 2023-2024 due to higher mortgage rates, but Prime London (PCL/POL) expected to show resilience (+3% PCL, +2.5% POL in 2025) compared to UK overall (-5% PCL, -4% POL).

Prime London Lettings Market

• Rental values experienced significant growth: PCL +27%, POL +23% YoY.
• Lettings supply remains tight due to continuous strong demand and lower new listings compared to the 5-year average.
• Market valuation assessments increased 44% for flats under £1,000/week and 166% for properties valued £1,000-£5,000/week in March 2023 compared to the 5-year average.
• Rental growth slowed in higher-priced segments (PCL: from 15.2% YoY down to current 5-6% growth; POL: 15.2% YoY down to current ~2-3%).
• Lettings market is expected to stay below equilibrium levels for longer, supporting rental growth rates.

Prime Property Market Forecast

• Knight Frank revised five-year forecasts for sales and rentals (2023-2027).
• UK Sales: Cumulative -10% over 2023-2024, then +4-5% from 2025-2027.
• PCL Sales: Expected decline from -3% to +4% in 2025.
• POL Sales: Expected slight increases later.
• Rentals UK/PCL/POL: Expected modest positive growth (particularly for PCL) over the forecast period, driven by cash buyers and returning international travel.
• Western Europe currency discount for international investors supports London prices (up 15% YoY from mid-2015 peaks).

Key Takeaways

• Post-pandemic recovery is well underway, though still vulnerable to economic shocks (mini-Budget).
• Prices and rentals have normalized after pandemic-induced highs, but affordability challenges persist due to interest rate hikes.
• London remains a strong market performer compared to rest of UK, partly due to factors like cash buyers and currency.
• The rental market faces supply shortages despite post-SRH cooling in sales activity.
• Future growth for rentals expected across London (PCL faster).