Knight Frank has published its latest reports into the prime London sales and rental markets.

In the sales market average prices in prime central London fell 0.9% in the year to July, which was the largest drop since April 2021. Meanwhile, prices declined by 0.2% in prime outer London, which was the first fall since March 2021.

London markets have outperformed the rest of the UK over recent months, according to a range of Knight Frank indicators. The reason is that prices have been so flat for so long compared to areas of the country that benefitted from a surge in demand for space and greenery during the pandemic, as the charts below show.

Knightsbridge, for example, was an area that suffered disproportionally from international travel restrictions and the fact it is largely a market of flats rather than houses. Prices there rose by 3.3% in the year to July, making it the strongest performing area in prime central London.

As a result, exchanges were 13% higher than the five-year average in July in London, while they were 5% down across the rest of the UK.

The full data for the prime London sales market can be found here.

In prime London lettings the long-awaited supply increase is underway. The number of lettings instructions in July in London was 18% higher than the same month last year and the highest for any single month since October 2020.

Rental value growth has continued to calm as supply improves but it’s still strong by historical standards.

Average rents grew by 13.7% in the year to July in prime central London, which is down from almost 30% at the height of the stock shortage in April last year. However, to put that in perspective, average rents grew by 15.6% in the ten years before the pandemic.

In prime outer London, rents grew 12% in the year to July, which exceeded the growth of 11% seen over the decade before the pandemic.

Although there will be more downwards pressure on rents as supply rises, there is unlikely to be a notable impact in the short-term as demand remains strong, particularly during the busy summer period. Rents grew by 1% in prime central London in the month to July, which was the highest figure since January.

Monthly growth of 0.9% in prime outer London was also the strongest result over the same time period.

The full data for the prime London rental market can be found here.