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The market for London’s most expensive homes has remained “robust” this year, highlighting the resilience of wealthy cash buyers in the face of a wider slowdown in the UK property market owing to high mortgage costs, according to the agency Savills.
There were 390 sales of properties worth £5mn or more in the capital in the first nine months of the year to September, according to data collated by the estate agent. The number of transactions was down on the 459 in the same period in 2022 — a record year for the high-end market — but 67 per cent higher than the pre-pandemic average taken over the three years to 2019.
These figures included 120 properties worth £10mn, which was 50 per cent higher than the pre-pandemic average.
“Prime markets generally have remained comparatively robust this year, but the latest data . . . underscores the remarkable resilience of the city’s prime central locations,” said Frances McDonald, head of residential research at Savills.
Chelsea, Kensington and Belgravia accounted for a third of the sales of £5mn-plus properties, according to the findings. Overall sales in that segment totalled £4.3bn in the first nine months, with the third quarter accounting for £1.7bn worth of deals as sales activity picked up slightly on the rest of the year.
“Predominantly at this price point [the increase] is mainly fuelled by cash buyers,” McDonald said. Wealthy buyers had returned to their traditional preference of cash purchases after briefly switching to very low-rate mortgages available during the Covid-19 pandemic, she added.
The jump in activity in London’s high-end property sector comes as sales in the wider market have slowed owing to a rise in borrowing costs as a result of successive interest rate raises by the Bank of England. The overall UK housing market is on track for its slowest year in more than a decade, according to property portal Zoopla.
The average two-year fixed residential mortgage rate is 6.37 per cent, up from 5.33 per cent six months ago, according to Moneyfacts. The end of a government scheme earlier this year designed to help first-time buyers has further depressed the wider market.
Helped by the resilient prime market, central London property prices have held up better than elsewhere, falling by 1.2 per cent year on year in the third quarter, compared with a 2.5 per cent drop in outer London. House prices across the UK have fallen 2.8 per cent since their peak in March 2022, according to lender Nationwide.
Apartments made up nearly half of the properties worth £5mn or more that were sold this year, the highest level since Savills began to record data in 2012.
“The apartment market is dominated by global cash, with buyers often making their first London purchase, whereas houses are the preserve of UK buyers or those from around the world who’re fully settled in London, invariably buying for the second or third time as family needs evolve,” said Alex Christian, joint head of Savills private office.
McDonald said North American buyers looking to make the most of the strong dollar had helped underpin the top end of the market this year.
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