Almost £3 billion has been spent on luxury property costing £5 million or more so far in 2022 according to research by agent Savills, the highest ever recorded.
Over half the sales in traditional super prime hotspots like Knightsbridge, Chelsea and Belgravia.
At 294, the number of homes sold in the first half of this year is almost as high as the total seen across 2019 as a whole (308 homes), the last period unaffected by the pandemic. It is even higher than in the bounce-back years following the 2008 financial crisis.
There was also an increase in homes selling for more than £10 million, with 89 £10 million-plus sales completed in the first half of 2022, a 41 per cent increase on the first half of last year and 94 per cent increase on 2020.
A separate report from LonRes recorded super luxury sales including a 12-bedroom mansion on Belgrave Square near Harrods which sold for £90 million, and a property on The Boltons in Chelsea which sold for £42 million.
However, prices in prime London areas are still 17.6 per cent below their 2014 peak. Since then, the top end of the market has faced setbacks ranging from Brexit to tax changes and most recently the pandemic which has kept foreign buyers away.
Many Asian buyers, particularly those from China and Hong Kong, were reluctant to visit London because of onerous Covid restrictions when they returned home while Russian buyers have also completely dried up since the start of the war in Ukraine.
This means wealthy Britain-based buyers continue to dominate the market’s top-end. With less reliance on the need to borrow money, this group remains relatively unaffected by the issues in the mass market such as rising interest rates and the cost of living crisis.
A combination of these factors, plus the looming threat of a recession, means some experts have predicted house prices in the mainstream market will cool towards the end of the year.
Alex Christian, London director at Savills Private Office, said some foreign investors were starting to reemerge in the prime London market, especially Asian buyers.
“London still looks like good value in a historical context, with prices well below the 2014 peak, and the pound remains weak against the American, Singapore, and Hong Kong dollar, as well as the Chinese Yuan, meaning that London property is looking like an increasingly good investment opportunity to buyers in these markets.”
He added: “Above all, prime central London’s reputation as a safe haven for international investment remains, and it is also seen as a secure bet to hedge against inflation.”
Alex Woodleigh Smith, managing director of Knightsbridge buying agency AWS Prime said the sector was seeing a correction in the value of prime central London property following the sharp decline experienced between 2015 and 2022, coupled with an ongoing shortage of stock.
“Add to this, a reinvigorated pool of domestic buyers and the re-emergence of international buyers fighting over limited supply and it is easy to see why scarcely available properties in the best addresses in London have become so irresistible. As a result, our summer has been anything but quiet”.