Over the last four years, the UK property market has lived through a general election, a global pandemic, a stamp duty holiday and the mini-Budget. We have become used to melodrama and the next convulsion could be around the corner. Or it may not. In fact, based on the evidence from the first four months of this year, 2023 feels like the most predictable year for the prime London property market since 2018.
Demand is resilient and supply is recovering from the lows of the pandemic. The number of new prospective buyers registering in the first quarter of this year was 42% higher than the five-year average excluding 2020 across London. Meanwhile, new sales instructions were up by 20%.
The further we get from last September’s mini-Budget, the stronger the market becomes. The number of offers made was 10% above the five-year average in Q1 2023 after being down by 11% in the final three months of last year. Exchanges were also up by 10% between January and March.
Overall, the market is solid without being spectacular and things have stabilised after a four-year roller-coaster ride.
The economic backdrop has also become more benign. The UK is not heading for a recession anymore, according to the Bank of England and the Office for Budget Responsibility. Both institutions were making some fairly dire economic predictions this time last year. To underline how balanced conditions are, average prices in prime central London are only 0.2% higher than this time last year. The change is 1.8% in prime outer London.
Conditions are reassuringly uneventful, as we analysed last month, but it would be sensible to enjoy them while they last. It is a safe bet that the property market won’t be on such an even keel in 2024. The main reason is the general election, which is starting to move onto the radar for buyers and sellers, particularly in higher-value markets.
The taxation of wealth and property and the status of non-doms will all come under growing scrutiny. It is one of the reasons we expect the number of sales above £10 million to come down by at least 10% next year.
The reverberations of the mini-Budget are fading but the drumbeat of the next UK general election is slowly growing louder.
