LONDON - London’s cooling luxury housing market is turning into a tale of two sellers – those willing to knock down the asking price to secure a deal and those too stubborn to budge.

More than half of the prime homes in the city were sold at a discount in April, with the average price reduction rising to 9.1 per cent for the first time in more than 3½ years, according to data compiled by researcher LonRes.

However, sales dropped by more than a third from the same month in 2022, as tenacious vendors sit on the sidelines waiting for the bargain hunt to end.

“Sellers are referencing prices of yesteryear, while buyers are looking to a future in which they expect prices to fall,” said LonRes managing director Anthony Payne. “There’s a gap between the two that is causing the market to stall.”

Britain’s housing market is in the midst of a slowdown triggered by higher borrowing costs and a possible drop in house prices.

Home owners are being forced to cut down other expenses to cover higher loan repayments, while many prospective buyers are avoiding the mortgage market altogether.

That is why London’s most expensive homes – typically snapped up by wealthy, less debt-reliant buyers – are defying a wider slowdown in the city’s property market.

Agreed sales for homes priced at £5 million (S$8.4 million) or more – which account for just 8 per cent of the prime London market – were 26 per cent higher in April than a year ago, the report said.

Meanwhile, the number of properties under offer across the whole of prime London declined 11.7 per cent year on year in April – a month often associated with a seasonal bounce in deals.

This metric – billed as the “lead indicator” by LonRes – suggests sales activity is unlikely to rise significantly over the next few months.

Still, the number of prime London sales so far in 2023 is only 1.4 per cent lower than the pre-Covid-19 average from 2017 to 2019.

The severity of this decline throughout the rest of the year will largely depend on whether more sellers emerge from the sidelines and agree to cheaper deals.

“For those vendors who fail to recognise the true value of their home in today’s market, the only path is one that leads to a downward price drift,” Lonres’ Mr Payne said. “Small price reductions that edge towards the true value of a property frequently result in a bigger reduction later down the line.” BLOOMBERG