Prime Central London Q3 2020

The Cluttons Prime Central London Index, shown in Figure 1, reported that sales values in PCL were 8.4% lower in Q3 2020 than a year earlier, the seventeenth consecutive quarter of annual price falls. Rental values fared even worse, recording an annual fall of 14.1% – the largest drop since 2009.

Figure 2 shows the results for the individual PCL sub-markets. On sales, the best performer for Q3 2020 was Regent’s Park with no annual change in values – the only area that didn’t see price falls. All 15 areas recorded double-digit annual falls for rents.

Sales and rental activity in Q3 were again strongly affected by the lockdown and the related economic fallout. LonRes reported that sales transactions in Prime Central London[1] fell by 19% compared with a year earlier, and agreed rentals by 23%.

The Land Registry transaction figures (these are only robust up to the end of Q1 due to the lag in recording official completions) are shown in Figure 3, along with the national and London-wide indices. On this measure, activity in PCL at the start of the year was increasing slightly but remained low compared to both past levels and the relative performance of the wider London and national markets. The impact of the pandemic on these official transaction counts will take many months to emerge.

The RICS survey data has continued its volatile 2020. Figure 4 shows the results for sales and price expectations in London. The net balance of opinion for short-term (three month) sales activity swung from +54 in February to -80 in March, then recovered to +10 in July before falling to -21 in September. Sales expectations for the next year behaved similarly, with September ‘s figure at -3. Price expectations have followed a similar path, with the short-term measure now at -14 after peaking at +51 in January and falling as low as -74 in March. As of September, the longer-term measure sits at +2.

On the rental side, the latest results again show significant volatility. Tenant demand in London continues to be weak, with a net balance of -24 in September. Combined with increasing landlord instructions (+24) there is clear downward pressure on rents: the three month rent expectations metric hit -67, a record low since the RICS monthly series began in 2013.

Overall, these figures show that surveyors in central London are relatively uncertain about future prospects for the sales and lettings markets.

[1] LonRes define PCL as SW10, SW1A, SW1W, SW1X, SW3, SW7, W1J, W1K and W8