A higher proportion of homes bought with cash and a sustained lack of stock in the most sought-after locations means Prime Central London (PCL) is less tied to fluctuations in UK mortgage rates. However, the central London market is not immune to changes in economic conditions, with sentiment rather than interest rates often having a greater impact on activity and pricing. And while Prime Central London is less reliant on debt the discretionary nature of many purchasers buying decisions means PCL is often more reactive to changes in sentiment and economic headwinds than mainstream, both when prices fall and when they increase.
For the rental market, uncertainty often increases demand with prospective purchasers holding off on their decision to purchase and renting or remaining in rented instead. We continue to see demand outstripping supply for prime homes, but there is more balance in the market this year than we have seen over the last 12 months. Stock levels, while still significantly lower than the pre-pandemic norms have improved, and rental growth recorded in the Q1 2023 JLL Prime Central London Index has returned to single rather than double digit annual growth.
