THE BRIEFING Property
READY FOR TAKE-OFF? The prime central London property market is set for price increases, writes Katharine Swindells
LONDON’S PRIME AND super-prime property market enjoyed a ‘short-lived Boris Bounce’ following the 2019 general election, says Frances Clacy, associate director of residential research at Savills. But the Conservative victory, which soothed worries about the consequences of a Jeremy Corbyn premiership, came after several years of declining prime property prices in the capital as Brexit and stamp duty were among the factors to slow the market (chart 1). In 2020 the pandemic brought about a brief but total suspension of the UK market, as well as a further decline in prices. But, last year, things started looking up. From January to October of 2021, there were 398 sales of London properties of £5 million or more, worth a combined total of £4.1 billion – the highest volume and value of super- prime sales in the city since 2014 (chart 2). ‘For most of last year there was a question mark over places like New York and London, the big global city markets,’ says Liam Bailey, global head of research at Knight Frank. ‘But the desire for people to come together hasn’t disappeared, and seemingly never will, so I think people were probably too negative on cities for too long, and they’ve been proved wrong, and people have come back.’ Several top agents also report increasing demand in the prime and super-prime lettings market, where competition is being amplified by a significant shortage of supply. According to analysis by Knight Frank and LonRes, the number of lettings listed for £5,000 a week or more in Q3 of 2021 was less than a third (31 per cent) of the level it had been at the same time in 2020. In fact, the number of super-prime properties available for let is the lowest it’s been since 2016. ‘On the lettings side, the market has been absolutely crazy and ridiculous,’ says Sabaya Verger, a partner at Tedworth Property who focuses on Chelsea, Knightsbridge and Belgravia. ‘Everything has been flying off the shelves. And people will pay a premium for properties that are finished to a very high standard of quality – especially in the very high-end market.’
So far, the recovery in sale prices has been modest – returning the market to around its ‘Boris Bounce’ level. But growing demand for luxury homes in the capital suggests that 2022 may be the best year for London’s prime market in over half a decade. Knight Frank forecasts growth of seven
per cent in average prices of prime London property in 2022 (chart 3). This would see it outstrip cities such as New York and Paris. ‘Part of central London does tend to do well in inflationary periods, which is what we look like we’re in at the moment,’ says John Waters, a director at Robert Bailey Property who has 18 years of experience in the prime central London property market. ‘I just wonder whether that’ll be tempered with the other risk factors globally. There’s still a little way to go before the world opens up and it’s business as usual.’
Roarie Scarisbrick, a partner at Property Vision, believes that the UK capital remains attractive to international UHNWs, notwithstanding certain risk factors. ‘Everybody’s got their eyes on us – London still seems to be very appealing for a lot of people as a safe, great place to live, to have as a base, or to store their money. But they won’t like it if they’re heavily taxed.’ ‘London is a bubble and will stay a bubble
forever,’ says Verger. ‘Every single millionaire or billionaire you come across has a property in London.’ Globally, Knight Frank expects Miami to be the city with the strongest performing property market. It is forecast to build on a bumper 2021 with 10 per cent growth in 2022. The record-breaking glut of M&A activity seen in 2021 is expected to drive price growth across the world as entrepreneurs
Prime London property is seeing its first sustained price growth in over five years Change in average price of UK prime property (Q1 2015 prices = 100)
1
2021 has seen the most super-prime sales since 2014 Number of sales in London of £5 million or more
2
Source: Savills
Source: Savills
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