Supply and demand soar in London's luxury housing market

London's luxury housing market is experiencing a resurgence in both supply and demand, signalling a recovery from the chaos caused by last year's mini-budget, as per a report by Knight Frank. The demand for prime London properties has been robust in the first four months of this year, with the number of new potential buyers surpassing the five-year average (excluding 2020) by 35%.

Simultaneously, the supply of prime London properties has also increased, with listings growing by 16% over the same period. Consequently, the number of property exchanges rose by 8% compared to the five-year average (excluding 2020).

Several factors have contributed to this renewed interest in luxury properties in the capital. The return of international travel, a relatively weak pound, and prices in prime central London remaining 15% below their peak in mid-2015 have all played a significant role. Additionally, prices in prime outer London are down 7% from their peak.

In terms of average prices, there hasn't been much change in prime central London over the past year, experiencing only a slight decline of 0.1% year over year in May. On the other hand, prime outer London witnessed a 1.4% annual increase. The most significant surge in sales activity was observed in properties priced at £5 million or higher, which saw a 40% increase in sales during the first four months of the year. However, sales of properties below £2 million decreased by 3%.

Despite the increase in mortgage rates, which are now more than double what they were two years ago, lower-value property markets are still performing better than anticipated, according to the report. Conversely, London's suburbs are not experiencing the same level of activity. Between January and April, the number of prospective buyers in the suburbs decreased by 7%, and property viewings declined by 9%.

Overall, London's luxury housing market is bouncing back from the disruption caused by the mini-budget, with prime London witnessing a surge in both supply and demand. Factors such as the return of international travel, a weakened pound, and relatively lower prices compared to the peak in 2015 have contributed to the market's recovery. While higher-value properties are in high demand, lower-value markets continue to perform well despite the increase in mortgage rates. However, the suburbs are experiencing a decrease in activity, with fewer potential buyers and property viewings during the first few months of the year.

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Supply and demand soar in London's luxury housing market

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