London’s luxury residential market has recorded more sales in the first nine months of 2021 than any full year since 2015, as international buyers return to the market, property consultancy Savills said.
In total, 352 £5 million-plus transactions were recorded in the first three quarters of the year, compared to 348 in the whole of 2020 and only 310 in 2019.
Nearly half of all sales were in prime central locations such as Chelsea, Kensington, Belgravia, Notting Hill and St. John’s Wood.
Frances Clacy, Savills research analyst, said the increase in sales had been driven mainly by demand from buyers already resident in London due to the lack of international travellers during the pandemic, but that picture is now changing.
“We are just beginning to see the return of international demand to a prime central London market that continues to look like good value in a historical context,” said Frances Clacy, Savills research analyst.
“As international travel gradually resumes, we expect to see more pronounced price growth in this market and for the long-awaited recovery to take hold in earnest.”
British house prices recorded their biggest increase in almost 15 years in September before the end of a tax break for buyers, with expectations that prices will continue to increase amid limited supply.
Prices rose by 1.7 per cent from August, the biggest monthly increase since February 2007, adding £4,400 to the value of an average property, which now sits at a record high of £267,587, the Halifax House Price Index shows.
The value of £5 million-plus sales in the year to September 2021 was £3.49 billion, Savills said, 39 per cent higher than the £2.51bn in the first nine months of 2020 and 62 per cent higher than 2019’s £2.15bn.
While sales in the £5m-£10m range dominate the market, there have also been 94 £10m-plus sales in 2021 so far, the highest figure since 2015, with a total value of £1.77bn, compared to 69 sales worth £1.33bn in that value category in the same period last year.
There are now 13 buyers for every property listed in the UK, consultancy Knight Frank said, but Alex Woodleigh-Smith, managing director of buying agency AWS, said the prime central London market is "even more acute".
"Most recently we’re hearing of double-digit viewings being booked in by estate agents for the opening weekend of a special property’s launch,," he said. "There is definitely a sense of anticipation now that travel restrictions have lifted for a further 47 countries ... This is why we’re seeing such an uplift in new clients."
While Savills expects prime central London property prices to end the year 2 per cent up, rising to 8 per cent in 2022, high demand for houses with six or more bedrooms means prices have risen 6.2 per cent in the past year, against an average increase of 2.4 per cent across prime London as a whole.
Meanwhile, prime central London apartment prices have grown 0.6 per cent for the first time since the 2014 market peak, in a further signal that values have bottomed out.
“It’s very promising to see so much activity at this end of the market over the past 12 months. Now, with Londoners back in their homes and offices, there’s a real buzz to prime central London,” said Jonathan Hewlett, Savills’s head of London residential.
Meanwhile, London’s rental sector is also experiencing a surge in overseas tenants with 36 per cent of new tenants in the third quarter coming from the European Union, London Central Portfolio said.
As travel restrictions eased further in the third quarter, only 20 per cent of new tenants were from the UK compared to 42 per cent in the same period a year ago.
Marylebone was the rental hotspot in the third quarter with almost 40 per cent of enquiries for properties in this area, as tenants now prefer access to green open spaces as well as restaurants, shops and a short daily commute.
Andrew Weir, chief executive of London Central Portfolio, said the heightened market activity is very different to the void periods and reduced rental income plaguing the market during the pandemic.
"The recent positive results signal a turning point and the return of London as a global destination of choice for employment and education," he said.
"LCP received nearly triple the number of enquiries for properties in its letting portfolio in Q3 2021 compared with the same quarter last year. Our lettings results demonstrate that when people are permitted to travel, London is high on their priority list."