LonRes analysis of the prime London housing market shows the number of properties recording price reductions has increased since the end of September.

While much lower than the absolute numbers recorded in October and November last year, the number of properties seeing price reductions in January 2023 was the highest for that month since 2018 according to LonRes records.

Further analysis shows that it is the top end of the market that has seen the biggest increase in price reductions compared to last year – perhaps reflecting the increase in available supply in that part of the market.

While the broader prime London housing market has returned to pre-pandemic levels of activity, the top end of the market is still strong, according to LonRes. January 2023 saw a continuation of this trend, with both rising sales and new instructions of properties priced at £5m or more – perhaps encouraged by sellers being more realistic on pricing.

The number of new instructions in January 2023 was 167% higher than January 2019 and 43% higher than January last year.

The number of sales of £5m-plus properties has also increased. The number of sales in January 2023 was 92% higher than January 2019 and 56% higher than January last year.  

According to to LonRes, the resurgence in sales activity and recovery in prices in this market has helped encourage the largely discretionary sellers to list their homes, resulting in a feedback loop that has led to more sales and more homes being listed for sale.

However, with high numbers of new instructions, the number of homes on the market at £5m or more is rising (15% higher than last year).  LonRes said this might be a concern in the wider market, especially with a 10% decline in under offers compared to last year. 

However, the analysts pointed out that while many sellers have adjusted their price expectations given the large number of price reductions, the discretionary nature of the top end market suggests many others will simply withdraw from the market if they fail to achieve the price they expect. 

In fact, this appears to be the case, with January 2023 recording the largest number of properties withdrawn from the £5m-plus market in a single month according to LonRes records.

“The pandemic boom is over for most of the prime London housing market but the top end is still going strong,” said Anthony Payne, managing director of LonRes.

“Housing market activity during January was lower than seen in recent years as higher interest rates and weaker demand brought sales activity back down to pre-pandemic levels. 

“However, January is usually a quiet month for the housing market and everyone’s attention will be focused on the next couple of months, as the spring market gets underway,” Payne added.