High-end homes in central London are selling at the biggest discounts in more than a decade as sellers continue to set ambitious prices even as the market declines.
In 2017 homes in the most exclusive postcodes were sold at an average discount of 10 per cent or more on their initial asking price, according to figures from LonRes, a research company.
The gap between what buyers will pay and what sellers ask for their homes in this segment of the market is now greater than it was in either 2008 or 2009, following the financial crisis.
Marcus Dixon, head of research at LonRes, said buyers were becoming more confident in demanding discounts and sellers were more likely to accept lower offers. “People are going in with relatively cheeky offers, and sellers are accepting them,” said Mr Dixon. “There’s a bit of realism creeping in about what properties are worth.”
LonRes’s data cover London’s most exclusive districts, including Kensington and Chelsea, as well as prime parts of the capital extending from Canary Wharf in the east to Richmond in the west and Hampstead in north London.
Outside the most expensive “prime central” areas, discounts to initial asking price stood at just over 9 per cent — the highest level since 2009.
Prices per square foot in prime London have fallen 5 per cent since their 2014 peak while in the most expensive “prime central” areas they are down 11 per cent.
Many sellers have resisted dropping the prices of their properties, instead choosing to withdraw them from the market. Transaction volumes fell across central London in 2017, with the number of properties sold down 3.6 per cent over the year as fewer homes were put to the market.
LonRes said people were still taking their homes off the market if they could not achieve their desired price. More than half the homes leaving the market in the fourth quarter of 2017 were withdrawn rather than sold.
Roarie Scarisbrick, a partner at estate agency Propertyvision, said buyers were keen to get discounts on property asking prices and that properties were still changing hands as sellers accepted discounts.
“There have been some transactions — but it’s not boom time,” said Mr Scarisbrick. “It’s becoming obvious that you don’t set foot in the London market unless you really need a London house.”
Foreign buyers, who are attracted by favourable exchange rates between sterling and most currencies, were an exception, he said. “You can do well if you roll your sleeves up and get involved in a proper negotiation,” he added. “But I can’t see any catalyst for a resurrection in the market.”
Other estate agents reported that sellers were beginning to accept that the value of prime central London homes was unlikely to grow over the coming few years. “Sellers are saying, ‘if I get a buyer at a reasonable level, I’ll do a deal’,” said Charles McDowell, who runs a prime London estate agency. “There are deals being done — quite big-ticket deals — but this is certainly a market where buyers perceive value.”