But with more potential buyers coming forward could we see a change in the fortunes of the sales market in the coming months?
PCL Sales
The PCL sales index recorded a modest quarterly fall, down 0.4% on Q1 2022. Prices remain 1.4% higher than they were a year ago and 4.3% higher than they were pre-pandemic in Q1 2020. Houses continue to see higher growth than flats, with annual increase for flats of 0.8% compared with 3.8% for houses.
But activity looks set to increase. The number of applicants registering with JLL PCL offices in Q2 2022 rose 63% compare with 2021 and was 33% higher than 2019 levels. We are seeing an increase in applicants willing to spend more on their prime central London property too. 54% of applicants registering for homes in Q2 2022 had budgets which would stretch to more than £2 million, compared with 35% of prospective buyers in Q2 2021.
PCL Lettings
The PCL lettings market continues to see rents rise as stock levels, particularly of smaller one- and two-bedroom flats remain constrained.
Rents rose 2.0% in Q2 2022 compared with the previous quarter, 14.4% higher than they were a year ago. Rents are now 5.1% higher than they were pre-pandemic in Q1 2020.
New applicants have fallen back in Q2 2022, with 15% fewer registrations across JLL PCL offices compared with Q2 2021 suggesting we could begin to see supply and demand become more balanced as we move into the second half of the year.
Marcus Dixon, director of UK Residential Research at JLL, explains: “Interest from prospective buyers for prime central London homes increased this quarter, JLL recording the highest number of new PCL applicants registering in Q2 2022 since pre-pandemic, up by 63% on Q2 2021. Yet this increased demand has yet to impact prices, which remain little changed this quarter, with marginal falls on Q1 and increases of 1.4% compared with the same point a year ago.
“But we remain optimistic regarding the prospects for price growth in the second half of the year. Buyers in prime central London are less exposed to increases in living costs and interest rate rises which we anticipate will hamper growth prospects in the mainstream housing market over the coming months. And if overseas buyers return this summer, as expected, alongside applicants taking the plunge to buy we could see prices rise too.
“The PCL lettings market continues to see rents rise, as prospective tenants outnumber available properties. Rents rose 2% this quarter and are up 14% annually. But applicant levels are settling, with 15% fewer prospective tenants registering in Q2 this year compared with last, meaning we could see more balance between supply and demand across the PCL market in the coming months.”
