The price of London’s swankiest properties gained the most in more than 7 years last month as returning demand for city centre homes tempt sellers to cash out.
Prices gained 2.4 per cent in London’s priciest central postcodes in May, the highest rate of annual growth since April 2015, according to an index compiled by broker Knight Frank. Prices in the so-called prime outer London districts, which include areas such as Battersea, Hampstead and Canary Wharf, have gained 4.8 per cent in the past 12 months, also a 7-year high.
London’s luxury housing market has endured a long slump that was triggered by a series of tax hikes beginning at the end of 2014. That’s finally come to an end as buyers return to the city after the pandemic.
Sellers are bringing homes to the market to try to cash in on the renewed demand as mounting economic warnings give owners the sense that prices may be peaking. The number of offers accepted in May was the highest monthly figure in a decade, Knight Frank’s data show.
That comes even as the wider UK housing market starts to lose momentum after a boom that was spurred by a sales tax holiday during the depths of the pandemic. Rising interest rates and a cost of living squeeze are starting to cool demand for homes outside of London’s most expensive areas though a shortage of stock available to buy has helped support record high prices.
“For those wondering when this period of strong activity will end, it’s likely to last longer inside zone 1 due to the recession-proof qualities of prime central London including higher levels of affluence and housing equity and a broader base of international demand,” Knight Frank head of UK residential research Tom Bill said. “After 7 subdued years, a longer-term recovery is also underway in prime central London, which will only hit its stride when international buyers return in meaningful numbers.”
The number of new prospective buyers that registered in prime central London last month was the third highest figure recorded by Knight Frank in the past decade. That was met with a corresponding increase in the number of homes available to buy, with new sales instructions in May the sixth highest figure in the past decade, the broker’s data show.
