Last month, the price of London’s most opulent residences increased by the most in more than seven years, as rising demand for city center homes tempts owners to sell.
According to an indicator developed by broker Knight Frank, prices in London’s most expensive central postcodes increased by 2.4 percent in May, the greatest annual growth rate since April 2015. In the previous year, prices in the so-called desirable outer London districts, which include Battersea, Hampstead, and Canary Wharf, had risen by 4.8 percent, a 7-year high.
The luxury home market in London has been in a sustained fall since a series of tax rises began at the end of 2014. This has finally come to an end as customers return to the city following the pandemic.
As rising economic warnings give owners the idea that prices may be peaking, sellers are putting properties on the market to try to cash in on the revived demand. According to Knight Frank’s research, the number of bids accepted in May was the highest monthly total in a decade.
This comes as the larger UK home market begins to cool off following a surge fueled by a sales tax holiday during the pandemic’s worst days. Rising interest rates and a cost-of-living squeeze are beginning to chill demand for houses outside of London’s most affluent regions, yet a scarcity of available stock has aided in maintaining record-high prices.
Knight Frank head of UK residential research, Tom Bill, said that this period of strong activity is likely to last longer inside zone 1 due to the recession-proof qualities of prime central London, including higher levels of affluence, housing equity and a broader base of international demand. Bill added that a longer-term rebound has begun in prime central London, which will only gain its stride when overseas buyers return in major numbers after the seven-year slump.
The number of new potential buyers who registered in prime central London last month was the third highest in the last decade, according to Knight Frank. According to the broker’s statistics, this was accompanied by a rise in the number of properties available to buy, with fresh sales instructions in May reaching the sixth highest level in the last decade.
According to Bill’s analysis of the data, homeowners believe prices are nearing a peak due to the increasing number of economic warnings and rising mortgage rates. As a result, more sellers are putting their homes on the market.
It’s a perfect storm, according to Andrew Groocock, head of sales at Knight Frank’s East and North areas in London. He commented that their London sales pipeline is at an all-time high, surpassing even the busiest days of the stamp duty holiday.