With the housing market in prime London remaining open during the current month-long lockdown, the momentum generated since the market re-opened in May is expected to drive deal activity into Q1 2021.

The latest analysis of exchanges that took place in October in London showed that just 36% arose from initial valuation appraisals that took place between June and September 2020; the equivalent figure was 32% in prime central London.

In other words, the majority of exchanges taking place are transactions that originated before the lockdown. But the large number of properties that have gone under offer since May is starting to translate into exchanges.

The extent of the post-lockdown surge means October was the third highest month in five years for exchanges in London, according to the research by Knight Frank.

However, this surge should be seen in the context of a market that has behaved erratically over the course of this year. The overall number of exchanges was 19% down in the first ten months of the year compared to 2019.

Meanwhile, prices have continued their upwards trajectory of recent months. Quarterly growth remained at 0.2% in prime central London for the second consecutive month, although prices remain down 4.5% year-on-year.

In prime outer London, prices rose 0.9% in the three months to October, which was the highest such rise in five years, led by quarterly gains in Belsize Park (3.2%), Dulwich (2.3%), Wandsworth (2.1%) and Wimbledon (1.8%).

As far as the rental market is concerned, high levels of supply have continued to put downwards pressure on rental values in the final quarter of the year in prime London lettings markets.

In prime central London, average rental values declined 9.1% in the year to October, continuing a trend that started during the first national lockdown in England. In prime outer London, the decline was 7.6%.

Supply, according to Knight Frank, has increased due to the addition of short-term lettings properties onto the market, a sector where demand has been curtailed by the pandemic.

Furthermore, more owners have decided to let rather than sell due to uncertainty surrounding the trajectory of prices as the impact of Covid-19 on the economy becomes clearer.

“If you exclude south-west London, supply levels are currently 20% above where we would normally expect them to be at this time of year,” said Gary Hall, head of lettings at Knight Frank. “That has come down from a figure of around 40% earlier this year. Rents are still falling and the properties that are letting are where the price has been reduced.”