It has been another busy month for the top end of the prime market in London but there are signs that the  wider UK property market could be cooling off, following the ending of the stamp duty window, new analysis shows.

October gain saw a different pattern of activity at the upper and lower ends of the prime market. Overall, sales last month were down 26% on a busy month last year and 19% lower than in 2019.

Yet there were 3% more sales at £2m to £5m and 10% more at £5m-plus compared with October 2020. Comparisons with 2019 are higher still, with the number of £2m-plus sales up 29% in October this year compared with the same month two years ago.

At below £2m the market was quieter, the research shows. The impact of the stamp duty holiday, pulling deals forward earlier in the year appears to be impacting volumes here. There were 31% fewer sales at below £2m this October compared with 2020 and 35% fewer than in 2019.

Even with a few quieter months, the sales market across prime London has outperformed the previous two years. The number of sales in the first 10 months of 2021 was 8% higher than the whole of 2019 and 23% up on 2020. Indeed, below £2m the number of sales so far this year is already 25% higher than the full 12 months of 2020 with 16% more sales at £2m-plus.

Prices

Achieved prices have risen across prime London over the past three months, with prices for flats up 2.8% on the same period a year ago and houses recording 7.0% annual growth. Overall prices rose 4.6%.

Annual change in achieved prices – rolling three months

Source: LonRes – rolling three months

New instructions and stock levels

The last two months have seen new instructions across prime London returning to historic levels. During October the number of new instructions fell by 2% on the 2015 to 2019 (five-year) average, following a 3% fall in September.

A buoyant sales market has meant levels of available stock have fallen compared with 2020. The number of properties available for sale in October was 12% down on the same point in 2020.

Looking ahead

The number of properties going under offer has fallen from the highs experienced earlier this year when the stamp duty holiday was still in place, but remain higher than the long run (2015 to 2019) average. October 2021 saw 14% more properties put under offer than the five-year average, following an 11% rise in September. This suggests sales activity will remain buoyant for the remainder of 2021.

Marcus Dixon, head of research at LonRes, said: “It has been another busy month for the top end of the prime market. Sales of properties priced at over £2 million were up 5% on 2020 and 29% higher than 2019. The lower end of the market was quieter, suggesting many buyers wanting to purchase this year had done so earlier on to take advantage of stamp duty savings. October saw 35% fewer sales under £2 million compared with 2020.

“Prices are rising too, with houses sold in the last three months achieving 7.0% more than in the same period last year. Flats, which sold less well over the course of the pandemic, also rose in value, albeit by a more modest 2.8%.

“Looking ahead the challenge for prospective buyers could be finding the right property. With available stock down 12% on October 2020 and fewer homes reaching the market for sale.”