London's Luxury Residential Market strengthens in Q2 2023
Published by Magnate Assets on
Jul 18, 2023
New analysis from Savills indicates that London's residential market for properties priced at £5 million and above is back in business following a slow start in the first quarter. However, the agent offers a word of caution, noting that buyers remain price-sensitive and focused on properties and addresses that are considered best in class.
During the three months leading up to June 2023, a total of 132 properties worth over £5 million changed hands, compared to 108 in the first quarter of the year. This brings the total number of transactions for the first half of the year to 240, marking a 21% decrease compared to the first half of 2022. However, it is in line with the same period in 2021 and represents a significant 45% increase above the half-year average of 166 for the pre-pandemic period between 2017 and 2019.
In the more exclusive market segment of properties priced at £10 million and above, there have been 65 sales year to date. This is slightly higher than the 63 sales in 2021 and represents a 17% increase compared to the 2017-2019 half-year average.
Frances McDonald, director of Savills residential research, highlights the slowdown experienced in the first quarter after a period of intense activity since mid-2021, as buyers refocused on city life. The latest quarterly figures underscore the remarkable resilience observed in the prime central London index, which saw a marginal 0.9% year-on-year decrease. However, given the unsettled domestic and international economic indicators, even the top end of the market, which is driven by cash transactions, remains price-sensitive, especially considering its discretionary nature. Sustaining momentum will rely on buyers and sellers aligning their expectations.
In terms of value, the Savills data reveals that over £2.4 billion worth of properties priced at £5 million and above have been transacted year to date, compared to £3.1 billion at the same time last year.
There has also been a shift in the types of properties being sold, with apartments accounting for a growing share of sales. As pandemic memories fade, apartments now represent 44% of £5 million-plus transactions across London year to date, up from 40% last year and a mere 28% in 2021.
McDonald adds that this shift partly reflects the completion of several world-class new build projects and the preference of buyers for turnkey properties. However, it also signifies a clear departure from a time when larger homes with private outdoor space were at the top of every buyer's wish list.
The rebound of London's luxury residential market demonstrates its resilience and attractiveness to high-end buyers. With ongoing market dynamics, maintaining alignment between buyers and sellers will be crucial for sustaining the positive momentum.