London’s £5m-plus sales in Q2 bounce

London’s £5m-plus residential market is back in business after a slow first quarter, according to new analysis from real estate adviser, Savills, though buyers remain price sensitive and focused on best in class properties and addresses.

Across the market as a whole a total of 132 properties worth in excess of £5m changed hands in the three months to the end of June 2023, up from 108 in the first quarter of the year – a total of 240 in H1.

While this marks a 21% fall compared to first half year sales in 2022, it is on par with the same period in 2021 and 45% above the H1 average of just 166 for the three years (2017-19) pre-pandemic.

At the more rarefied £10m-plus end of the market there have been 65 sales year to date. This is marginally higher than in 2021 (63) and 17% above the 2017-2019 H1 average but again, it is  below the same period in 2022 when 91 transacted.

“The first quarter marked a slowdown after an intense period of activity from mid-2021 as buyers refocused on city life,” says Frances McDonald, director, Savills residential research.  “These latest quarterly figures underscore the remarkable resilience that we have seen in our prime central London index, which fell a marginal -0.9% year on year.

“However, a backdrop of unsettling domestic and international economic indicators means that even the cash-driven very top end of the market is price sensitive, particularly given its discretionary nature. Momentum will only be maintained if buyers and sellers remain aligned in their expectations.”

In value terms, over £2.4bn worth of £5m-plus  properties have transacted year to date, according to the Savills data.  At the same time last year, that figure stood at £3.1bn.

There has also been a shift in the mix of properties selling, Savills reports.  Apartments continue to account for a growing share of sales as pandemic memories fade, accounting for 44% of £5m-plus transactions across London year to date, up from 40% last year and just 28% in 2021.

“To an extent this reflects the completion of a number of world class new build schemes, and buyers focused on turnkey properties, but it also marks a clear shift away from a time when larger homes with private outdoor space topped every buyer’s wish list,” says McDonald.

There remains a market for well-priced, best in class properties in London’s most long-established prime locations, however, with Chelsea, Kensington and Belgravia accounting for a third of all £5m plus sales so far this year.   But new build schemes such as The Whiteley and Park Modern in Bayswater are undoubtedly redrawing the prime map of London, Savills says.

Agents’ perspective:

Ed Lewis, Savills head of London residential development, says: “Prime central London remains stock constrained and this has certainly helped underpin the market at the very top end, as has the truly exceptional quality of some of the developments delivered over the past few years and those just coming to completion.

“But new supply will be squeezed by local government restrictions on the size of residences that can be built in the future and it’s become clear that those buyers looking for the very best, in one of the world’s few truly international cities, may be frustrated by the lack of choice in future years.”

Alex Christian, co-head of Savills Private Office says: “While there are a lot more buyers in the market than at the turn of the year, all are adopting a ‘belt and braces’ approach to every aspect of a purchase.  Selling in this market invariably requires pragmatic ‘open for business’ pricing.

“Because single unit developers have effectively been frozen out of the market by rising costs, stock of immaculate turnkey houses is especially constrained, meaning that the houses in schemes such as Chelsea Barracks represent a real once in a decade opportunity.”