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Prime Central London: Has the Market Bottomed?

Updated: Aug 18, 2022


A bull attacking a bear

"Be Greedy When Others Are Fearful"

Warren Buffett

In our December year-end newsletter we cited 10 key reasons why we expect Q1 2019 to mark the low point of the Prime Central London (PCL) property market. Since then our conviction has grown and in this months' newsletter we look back at how this Bear Market compares to others in the last 30 years and assess if there are grounds to believe Prime Central London property prices have bottomed.

1. The 2014-2019 Bear Market From a Historical Perspective: Mature & Oversold

At 56 months in length, the current downturn is mature. It far outstrips the 1989-92 and 2008-09 Bear Markets, making it the most prolonged downturn in 30 years. It is rare for any asset class to suffer downturns as long as this and by way of a comparison the average equity Bear Market since 1938 is just 14 months with the longest being 61 months (1942).

Duration of Prime Central London Downturns & Bear Markets

Turning to price, PCL has declined by -20% in nominal terms since mid-2014 and whilst this is not the largest decline of the 3 bear markets it is notable that the past 3 historic declines have averaged -22% within a tight range of -20% to -24%. If history is any guide then, we are within sight of a bottom:

Prime Central London Historic Price Declines 1989-2019
Historic Prime Central London Price Declines

When assessing drawn-out Bear Markets however it is more important to look at price declines in real (inflation-adjusted) terms. Here we can see PCL has declined -30% since 2014 with the current downturn being comparable to the early 1990's property crash; a painful, stomach-churning crash that gave way to a 15 year Bull Market and a +306% capital return in the London market:

Prime Central London Real-Term Price Declines 1989-2019
Prime Central London Prices in Real Terms Inflation Adjusted

Overseas Acquirers typically account for around 1/3rd of PCL Buyers and analysing prices in foreign currency terms is vital. In this respect the US Dollar is the most important currency not only because of the large number of US Buyers but also because of the large number of US Dollar-pegged regions that favour London property (eg Hong Kong, Malaysia, Singapore, Qatar, Bahrain, The UAE and Saudi Arabia). When movements in the US dollar vs Sterling are factored in alongside the underlying real-terms price declines, we can see the current Bear Market decline is the deepest in 30 years at -55%:

Prime Central London Peak to Trough Real Price Decline in US Dollars
Prime Central London Prices Currency Adjusted

2. Lead Indicators & Evidence from Agents Suggest a Bottom may be in Place.

Current market trends suggest there is strong reason to believe a bottom may already be in place. The Knight Frank New Buyers/New Listings is a useful lead indicator that tracks the number of new buyers to the number of new listings in Prime Central London and Prime Outer London over time. In January 2019 the index hit an all time high with new prospective buyers outstripping the number of new listings by 9.1x:

Estate Agent activity is also an important indicator and in this respect there have been numerous reports of a significant uptick in the market, that would appear to confirm the Knight Frank's analysis. These include:

Chestertons who have recorded a +37% increase in the number of applicants registering across its network in the first six weeks of 2019 and a +20% increase in offers. The agency has also seen a return of 'gazumping', an activity normally associated with a bull market.

Savills Guildford who have experience a +65% y.o.y increase in applicants in January 2019.


John D Wood Kensington who have emphasised that "Stock levels are still unseasonably low".

The Financial Times and LonRes have also reported that in Fulham (an area where prices have fallen -25% from the 2014 peak and one that the FT once described as the "Ground Zero" of the property market) there was a 40 per cent y.o.y increase in properties under offer in January.


We have little doubt that from a historical perspective the current Bear Market is long in the tooth. With a -20% nominal fall from peak, the current downturn sits within the tight range of past PCL troughs (-20% to -24%) and in real terms the -30% fall is just 4% shy of the early 1990's property crash, a crash that preceded a 15 year bull market and outstanding capital returns. More importantly the -55% real-terms, US Dollar denominated decline is the largest on record and is likely to lead to a number of Overseas Buyers returning to the PCL market (see our January Newsletter "Buy When There's Blood on the Streets" for more details). Furthermore lead indicators such as the Knight Frank New Buyers/New Listings Index and a wide range of evidence from Estate Agents suggests we may be at or near a bottom. Overall then as "The Sage of Omaha" would say, we believe it is time to "be greedy when others are fearful".

If you have any questions on this article or would like to find out more about how we can help you access the Prime Central London market, feel free to get in touch. Ludgrove has a number of highly attractive, pre-appraised Bulk Purchase and Development Opportunities for those looking to gain sizeable access to the PCL market. As well as executing searches and acquisitions on behalf of Individuals, Ludgrove acts on behalf of large Investors, Family Offices and Institutions.

With every best wish.

Fraser Slater

Chief Executive

Ludgrove Property Ltd

Tel: +44 (0)207 889 2860



Prime Movers

Biography: Fraser Slater is the CEO and Founder of Ludgrove Property. Prior to Ludgrove Fraser spent 20 years in The City. In the course of his career he was a Real Estate Analyst, the Fund Manager of a £6bn Equity portfolio for USS Ltd and the Founder and CEO of WDB Capital, a London based Fund Management business. In 2008 WDB Capital outperformed its peer group by +52% making Fraser's portfolio one of Europe's best performing Funds during the Financial Crisis. In the same year his Fund was nominated New Fund of the Year by EuroHedge. After leaving The City, Fraser developed property in Chelsea. He started Ludgrove with an ambition to be Prime London's leading Property Buying agency with an emphasis on original research and delivering a highly value-added service to clients.

Disclaimer: Ludgrove Property Limited is not authorised or regulated by the Financial Conduct Authority (FCA) and we do not provide any financial or investment advice.  We recommend that any property investor seeks appropriate professional advice before entering into any contract, and we would also advise that the value of any investment can go down as well as up and that you might not get back what you put in. You may have difficulty selling a property investment at a reasonable price and in some circumstances it might be difficult to sell at any price. We would urge you not to invest unless you have carefully thought about whether you can afford it and whether it is right for you, and if necessary to consult with a professional advisor in accordance with the Financial Services and Markets Act 2000. All information is provided strictly as a guide only, is subject to change without prior notice and does not constitute an offer of investment. The Ludgrove website should not be regarded as an offer or solicitation to conduct investment business, as defined by the Financial Services and Markets Act 2000. Investors who are resident in or citizens of countries other than the United Kingdom may be subject to local restrictions. In particular, no offer or invitation is made to any US persons (being residents of the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof), who are excluded from the services offered in this site. The information on this website and our publications has been obtained from sources which we believe to be reliable and accurate, but without further investigation this cannot be warranted.

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