Research by London lettings and estate agent, Benham and Reeves, has revealed that while prime central London properties are still being discounted to the tune of £25,000 on average, this discount has started to reduce as demand has returned to the capital’s high-end market.
The analysis of prime market data shows that in the current market, prime London properties are being discounted to the tune of -3.6% before securing a buyer. That’s a reduction of £47 per square foot, or £24,508 on the average flat.
However, this adjustment to asking price expectations is starting to reduce, down from -4.5% a year ago when high end sellers were accepting discounts of £56 per square foot – £29,418 on the average flat.
Current biggest discounts
Prime home sellers are currently accepting the largest discounts in Mayfair and St. James’s, where the average homebuyer is securing a -7.9% discount, equating to £94,062 on the average prime London flat.
Marylebone and Fitzrovia, Bloomsbury and Soho also rank amongst the areas where prime homebuyers are securing the biggest discount, with savings being made to the tune of £42,763 and £40,581 on the average prime flat respectively.
Where is the gap starting to close?
While prime London properties are still being discounted across the board, 14 of the 20 areas analysed have seen the size of this discount reduce in the last year as demand has returned to London’s top tier.
In Bayswater and Maida Vale, the average prime flat was seeing a discount of £36,081 a year ago. This has since dropped to £19,638, closing the gap between asking price expectations and sold price reality by -45.6%.
The discount being applied to prime properties in Hammersmith and Brook Green, Chiswick and North Kensington has also reduced by -45.5% in the last year, with Richmond, Kew and Sheen (-41.9%) and Battersea, Clapham and Wandsworth (-40.6%) also seeing the gap close by more than 40% during the same time period.
There are six areas of the prime London market where this property price reduction has increased. In Kings Cross and Islington, homebuyers were securing discounts of £1,685 on the average flat just 12 months ago. This has since climbed to £4,853 – an increase of +188%.
There has also been an increase across Hampstead (+47.5%), Midtown, City and City Fringe (+47.5%), Marylebone (+25.1%), South Kensington (+2.4%) and Fulham and Earls Court (0.6%).
Director of Benham and Reeves, Marc von Grundherr, commented:
“The prime London market is yet to fully find its feet following a rather sustained period of muted house price performance, spurred initially by the political uncertainty of Brexit, followed by the impact of the pandemic and restrictions to foreign travel.
However, it now certainly seems as though the tide is starting to turn and we’ve seen a growing revival of buyer interest across London’s top tier property market.
So while sellers are still offering discounts in order to secure a buyer, the extent at which they are having to lower their expectations is reducing and this is a trend that is likely to continue as the year goes on.”