A tale of two cities – it just depends which agent you speak to

Sales in central London are up, or down, depending on which agent you speak to.

That is the conclusion from reading separate reports from Winkworth, Strutt & Parker and Knight Frank that focus on the performance of central London and prime central London the first quarter of 2018.

Winkworth claims the central London market – encompassing Clerkenwell, the City, Kensington, Knightsbridge & Chelsea, Notting Hill, Paddington, South Kensington, St John’s Wood and the West End – is beginning to make a slow recovery

The franchise network said its branches have seen transactions increase by 12.5% annually in central London in the first three months of the 2017, but still 22% below the 2014 peak.

Average prices in the central London sales market also edged up by 0.4% year-on-year, Winkworth said.

Winkworth offices reported achieving an average 92.6% of the asking price for its central London sellers during the first quarter of 2018, a 2.4% improvement on the end of last year and from the same period a year ago.

Dominic Agace, chief executive of Winkworth, said: “The majority of transactions are therefore coming from owner-occupiers, with the higher proportion of activity being from first-time buyers in the sub-£1m market and growing families in the £3-5m market.

“This means that regardless of demographic, most buyers in the current market are purchasing for personal reasons, rather than for investment purposes.

“While the market has taken a more subdued tone, we don’t expect there to be any real movement over the next quarter or even over the next year in terms of property prices, which have remained static for the last 12 months.

“The key message we are giving sellers now is the importance of pricing realistically. Considering that the market is being driven first and foremost by pricing, homes that are priced correctly are selling well, but vendors must be educated properly on the market to understand that.

“Although slightly unpredictable at the moment, we are expecting the market to remain unchanged for the rest of the year, while sentiment remains cautious and many buyers and sellers wait to see the full effects of Brexit.”

Meanwhile, Strutt & Parker reported that PCL sales had dropped 17.2% annually in the first quarter of 2018.

It said the £2m-£5m and £5m+ brackets experienced a 34.1% and 79.5% quarterly increase respectively.

However, Knight Frank seems to be operating in a different version of PCL, as its own research over the same period claimed the number of transactions in the year to March 2018 rose 6% annually.

When sales volumes were split by price band, the biggest increase in the year to March 2018 was between £5m and £10m, which the agent said suggested Stamp Duty hikes have become more absorbed by the market at this price point.

This disparity may be down to the way the respective agents define PCL.

Strutt & Parker said it includes those markets in which it operates, which covers Knightsbridge, Belgravia, Kensington, Chelsea, Notting Hill and Fulham.

In contrast, Knight Frank is broader, including Aldgate & the City, Belgravia, Chelsea, Hyde Park, Islington, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, Riverside, South Kensington, St John’s Wood, Tower Bridge and Victoria.

Looking ahead, Strutt & Parker said it was banking on lower price growth and subsequent cheaper moving costs to help move the market as it moves into the summer.

The agent’s residential quarterly report for this spring showed transaction levels in the UK were 2.5% down annually in the first quarter of this year.

The agent said it was maintaining its forecast of 2.5% annual growth over the next two years across the UK and flat growth in PCL.

Guy Robinson, head of residential agency at Strutt & Parker, remained positive, though.

He said: “After a muted start to 2018, with snow interrupting many people’s decision to move, the market is showing signs of life.

“In a climate of fast property price growth and low Stamp Duty, the cost of moving previously seemed relatively inconsequential, but now, with higher Stamp Duty and lower house price growth, moving costs are extremely material in the whole event, and has had an impact.

“People have come to terms with Brexit, and sellers should be preparing to act on plans put back from last year. As we move into summer, we are hopeful that a lift in confidence will see an increase in supply to meet current buyer demand.”

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