LCP said Land Registry data for the second quarter showed the start of a recovery in sales volumes and prices in prime central London, following two years of stagnation.
Sales volumes have seen an annual increase of 4.8% to 3,885 and average prices reached £1,946,151 in Q2 2017, representing quarterly price growth of 7.9%
However, the increase in average prices is largely due to a surge of high value sales, with buyers taking advantage of price discounting at the luxury end of the market. They include a number of significant high value sales, including £90m for a flat in 199 The Knightsbridge Apartments, the most expensive sale ever to transact through Land Registry.
Underlying price appreciation for the rest of the market is less buoyant. With the top 10% excluded, average growth falls from 7.9% to a more typical 4.5%. June reflected a more sedate picture with average prices falling back to £1.65m from an average £2.2m in April and May.
Naomi Heaton, chief executive of LCP, said: “The increase in average prices appears to reflect a greater proportion of high value properties being sold, rather than any significant underlying growth. Not only have we seen some very large individual sales but transaction data shows the £5m – £10m bracket was the most active in Q2 with a 23% increase over Q1.”
Heaton said this can be attributed to international homebuyers taking advantage of price discounts, alongside beneficial currency exchange rates.
A divergent dynamic is being seen in the lower value market. Price growth in the buy-to-let sector was the most sluggish, reflecting a 1.3% increase for properties under £810,000. The proportion of sales under £1m also decreased by 9%.
“The buy to let sector is seeing a much slower picture as investors continue to adopt a wait and see attitude,” added Heaton.
England and Wales and Greater London continue to see falling transactions and slower overall price growth, impacted by the introduction of mortgage caps, the instability in the domestic economy and the growing new build crisis.
Average prices in England and Wales have shown almost nil quarterly price growth at 0.27% and now stand at £287,823. Transactions fell by 12% in Q2 with 844,380 sales annually, the lowest since Q2 2010.
“Despite government measures to reduce Stamp Duty for 98% of the market and schemes to promote activity such as Help to Buy, weaker sentiment and restrictions on borrowing continue to impact on the domestic market in England and Wales,” said Heaton.
“The government seriously needs to address the growing affordability issues within the sector and support the building of more low-cost housing for buyers. The artificial stimulus packages and tax reliefs do not appear to be reinvigorating new buying activity.”