London Real Estate Market
A Moving Market
The current real estate market in London for properties valued at £1 million or more has shown a notable resurgence as the world adjusts to the challenges posed by ongoing global economic challenges. This has led to an increase in house prices and a decrease in discounts.
The rise in property prices has been particularly prominent in areas outside central London, such as Richmond, Wandsworth, and Islington. This trend has been attributed to a growing demand for more living space, commonly referred to as the ‘race for space’, driven by the evolving circumstances brought about by the pandemic.
This market shift has created an opportunity for prospective buyers interested in central London, as certain areas currently offer relatively lower prices compared to historical levels. Notably, prices in Knightsbridge & Belgravia are estimated to be 17% below their peak in 2014.
However, this favourable pricing outlook may be short-lived, as numerous property agents in the UK are forecasting substantial growth in the luxury housing market in central London for the current year.
Analysts believe that properties valued at £1 million plus are experience sustained growth after a period of stagnation. Prices are on the rise, setting new records in select areas, and the level of negotiated discounts off the asking price is diminishing.
Kensington, Notting Hill, and Holland Park have displayed significant activity in the over £10m price category, while King’s Cross and Islington have witnessed a 12% increase over the past 12 months.
Post pandemic, many individuals were forced to reassess their housing requirements. Clients are seeking additional space, larger outdoor areas, and dedicated home office spaces. To fulfil these preferences, many have been compelled to seek residences in slightly more peripheral locations, resulting in heightened demand and subsequent price escalations in these areas.
Prime Sales Increasing
The market for super prime properties, valued at £10 million or more, has experienced a remarkable upsurge. Sales in 2021 have doubled in comparison to the previous year, with the period from October to December seeing some of the highest number of sales for over 5 years. At a glance, attributing this growth to the impact post pandemic would be reasonable. However with volatility seen in key economic markets such as Russia and China, many investors have sought to diversify their portfolio’s in London which has led to an influx of new regions investing in London.
Specifically, Turkey, The Baltic’s and South Asia have seen a large rise in prime purchases across London as regional economics plays a high role in the shift of ownership in the Super Prime purchases across London.
Analysts believe that Super prime buyers are leveraging the opportunities in the central London market, in the backdrop of global volatility before the next boom period is expected. Many investors are keen to allocate funds into assets they can genuinely appreciate, while others are simply seeking to invest in real assets that appear to be undervalued compared to historical prices.
Market Numbers
The latest data and analysis on luxury London property is derived from our routine examination of the market and the key analysts such as Savills & Knight Frank. This provides a comprehensive overview of overall trends and specific developments in different areas. Key highlights for the final are as follows:
- Prime property prices increased by 3%, resulting in an annual house price growth of 5%, primarily influenced by outer prime London markets.
- Despite the increase, prices remain historically low, currently standing at 8% below the peak in 2014.
- Super prime (£10m+) property prices have experienced an 11% rise over the past year.
- More than a third of high-end London properties are being sold at a reduced price, yet buyers are negotiating less off the asking price – approximately 7% compared to 8% the previous year and 13% three years ago.
- The number of properties available for sale has decreased by 17% compared to the previous year, with new listings down by 12%.
- The disparity in price between central London and other areas of the capital has significantly decreased. Four years ago, central property prices were over 70% higher than outer prime markets; however, they are now roughly 58% pricier.
