Strong domestic demand has made Chelsea London's most expensive area, exclusive research for The National conducted by Savills Research has found.
Last year The National exclusively revealed London's 10 most expensive postcodes, but this year marks a first for Savills, with a change of metric to areas.
"Postcodes somewhat blurred the lines as SW7 can be construed as both Knightsbridge and South Kensington," said Alex Christian, London director at Savills London Private Office.
What hasn't changed is how the list is compiled, with both the most expensive areas and postcodes based on the number of £5m-plus property transactions.
Figures for this year's list are from January 2020 and June 2022, with an addition being a breakdown of the transactions proportionally.
In total, the top 10 comprises 71.2 per cent of the total number of £5m-plus property transactions that took place across London during this period.
10 most expensive areas in London*
1. Chelsea (140/12%)
2. Kensington (131/11%)
3. Belgravia (120/10%)
4. St John's Wood (85/7.2%)
5. Mayfair (82/6.9%)
6. Knightsbridge (76/6.4%)
7. Marylebone (64/5.4%)
8. Notting Hill (60/5.1%)
9. Hampstead (50/4.2%)
10. South Kensington (10/3.0%)
*(number of transactions/percentage of transactions)
Domestic buyers dominating London prime
Although the data isn't broken down into domestic and international buyers, given it spans much of the coronavirus pandemic, when UK travel rules and high numbers of infections deterred interest from abroad, Mr Christian is confident the top 10 has a distinctly home-grown flavour.
"There have been very few transactions done internationally this year until late spring, probably from May onwards when we have actually seen numbers swell quite a lot," he said.
"We just didn't really see it in the early part of the year. [International transactions] were fairly prevalent at the back end of last year when travel restrictions were eased but faded when Omicron was identified in England.
Why Chelsea is London's most expensive area
Somewhat paradoxically, Chelsea's pre-eminence is largely down to the desirability of neighbouring Notting Hill.
"I think one of the reasons Chelsea's at the top of this is that it's probably absorbed quite a lot of the demand that was trying to buy Notting Hill but couldn't find the right thing at the right price," said Mr Christian.
The trend shows the microclimatic nature of prime London property: Notting Hill and Chelsea are contiguous, yet their property characteristics are markedly different.
"I think a lot of people have actually been priced out in Notting Hill," said Mr Christian,
"For some modernised houses in the area, prices have hit an unheard of £4000 pounds per square foot ― that's more than you're paying in Mayfair, Knightsbridge and Belgravia for modernised houses.
Mr Christian believes the mix of "exorbitant premiums" and limited stock in Notting Hill pushed them towards Chelsea where prices are (relatively) cheaper and stock more abundant.
Top 5 most expensive properties in Chelsea — in pictures
The allure of Notting Hill
Notwithstanding stock and price issues, Mr Christian is still a touch surprised about the 2022 data.
"If you were asking me without showing me these figures where the deals would have been done, I would have named Notting Hill and Holland Park," he said.
He listed its architecture, amenities and proximity to leafy areas as being part of the attraction — as well as the tribal nature of buyers there.
"A lot of the domestic money has been made in private equity, and that's where [many financiers] live — and they all like to be among each other and show off about how good the house they've been able to buy is," he said. "It's a bit of a chest thumping exercise!"
London prime continues to expand
The London prime market isn't just heterogenous, it is also extremely fluid — and rapidly expanding.
Battersea, Wimbledon, Barnes, Clapham and Wandsworth are the areas in south-west London that had the largest number of £5m-plus sales during the monitored period, Savills data showed.
The numbers weren't high enough for these areas to make it into the top 10 of London's most expensive areas, but Mr Christian thinks it may not be long until they do.
"The majority of the domestic market for quite a long time has wanted to live in a community and I think this has been exacerbated by Covid," he said.
"So much is about living where you feel comfortable in terms of having similar sorts of people with families living around you and all the things that families want in terms of more of a community feel, more greenery, and more local shops and restaurants."
Return of international buyers to London's prime's holy trinity
This isn't to say the London prime's traditional heartlands of Mayfair, Belgravia and Knightsbridge are set to fall further down the list in years to come. Mr Christian is expecting a significant return to the areas by international buyers.
"We'll probably certainly see a considerable slowdown in the domestic market. I think we're seeing that in at the moment," he said.
"And I think their shoes will be filled by international buyers who are looking to take advantage of a weak pound [to exploit the fact] UK property is seen as being a safe haven and a very good hedge against inflation."
If this prediction proves correct, it is likely next year's data will see a bounce in demand across Mayfair, Belgravia and Knightsbridge, the three perennial favourites of foreign investors.
Even in the 2022, the desirability of flats in Mayfair is apparent.
"There's been a lot of deals done in Mayfair in the new schemes like Number 1 Grosvenor Square," said Mr Christian.
"I think that's why Mayfair is up there. I think if you took these deals out, it would be right down the bottom somewhere."