The streets of London’s most exclusive postcodes may have been much quieter than normal this year but their housing markets have been surprisingly active as buyers look to take advantage of the value in the market.
Transactions of homes with a £5 million+ price tag were 12 per cent higher in the first three quarters of 2020 than in the same period in 2019, as this market segment recorded its strongest third quarter for five years.
These are results that nobody could have anticipated, not least because international arrivals into the UK remain at a fraction of normal levels.
After a strong start to 2020, with 88 £5 million+ deals in the first quarter, turnover across the market as a whole fell back to just 43 in the second quarter as the lockdown took its toll, before rebounding to 95 sales in the three months to the end of September.
This takes the total for the first three quarters to 226, a figure that not only means 2020 is ahead of 2019 – and expected to remain that way through to the year end – it is also just 9.6 per cent behind Q1-Q3 2018.
In value terms, a total of £877 million £5 million+ sales was transacted in the third quarter, almost back to Q1 levels. This brings year to date sales to £2.56 billion, 5.1 per cent higher than the first nine months of 2019, though 20 per cent lower than the total spent in Q1–Q3 2018.
While there’s been much talk of buyers seeking lifestyle alternatives to central London after the experience of lockdown, over half of these sales have been in the most established prime central London locations. Just five postcodes – SW1, SW3, W8, NW8 and W1 – saw 55 per cent of the £5 million+ market, underscoring the enduring appeal of the very best addresses.
The international travel restrictions have meant less competition and more opportunity for those on the ground this summer. However, the strength of the market this year to date perhaps indicates the start of activity being brought forward to beat the stamp duty surcharge for non-resident buyers which is due to come into effect on 1 April 2021.
For now, prime central London residential values remain around -21 per cent below peak and significantly more for those playing the currency card. We believe this value offer will minimise any further falls, particularly given the weakness of sterling.
However, we’ll likely have to wait until the back end of 2021 and into 2022 before a stronger recovery in values takes hold, once international travel has returned to more normal levels. Price growth for the 2020-2024 forecast period is expected to total 17.5 per cent.
- Full details of the Savills prime UK forecasts.
What is in store for the UK's prime residential markets?
Further information
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