More than 70% of “prime central London” properties sold so far this year have been bought entirely in cash, according to a report by estate agents Savills that fuels concerns that rich overseas buyers are snapping up properties at the expense of working Londoners.
A total of 71% of prime central London – an estate agent term for an area that stretches from Chelsea to Camden and Notting Hill to Westminster – have been bought mortgage-free in the seven months from January. That compares with about 35% for the UK as a whole.
It comes as soaring inflation has led the Bank of England to push interest rates to a 13-year high of 5%, which has in turn led banks to raise mortgage rates, making large home loans increasingly difficult to afford.
Frances McDonald, director of residential research at Savills, said: “The established prime markets most synonymous with equity rich buyers are holding up the strongest amid mortgage market turbulence.
“While London’s prime market continues to perform more strongly than expected, the most recent interest rate rises are likely to squeeze buyer budgets and increase price sensitivity, particularly in the more domestic outer prime locations where more buyers are dependent on borrowing. Sellers will need to price pragmatically to align with prevailing buyer expectations.”
The estate agency said that despite concern about the impact of interest rates in the wider housing market, “prime London residential values remained remarkably resilient”.
Prices across London’s prime markets have fallen by 1% compared with this time last year. That compares with a 3.5% fall in UK house prices overall.
Savills said this was because of “a growing divergence between cash and equity rich buyers and other groups in their ability to transact, and between the very top end of the market and lower value segments”.
Prices for the £5m-plus London prime market remain flat (-0.1%), while the £500,000-£1m market has seen some falls (-2.1%), and the under-£500,000 market has fallen further still (-2.5%).
Mayfair, Westminster and Marylebone were the most popular areas with overseas buyers looking for pied-a-terres. “International travel picked up at the start of this year, led by passengers from Asia, the Middle East and the US. While this has translated into increased demand, buyers at the top end remain discerning,” McDonald said.
More than 160 properties worth £10m or more were sold in London in the 2022-23 financial year – the most since 2016 when Brexit spooked the global super-rich from investing in the UK’s “super-prime” market.
A total of 161 such sales – or three a week – were made in the capital in the year to March, according to analysis of Land Registry data by the estate agent Knight Frank and the data provider LonRes.
Among the buyers splashing out last year was the Swiss billionaire Ernesto Bertarelli, who spent £92m on an 80-room mansion in Belgravia complete with a 20-metre swimming pool, luxury gym and cinema.
Hanzade Doğan Boyner, the founder and chair of the Turkish e-commerce platform Hepsiburada.com, which is often referred to as “the Amazon of the east”, bought a six-bedroom mansion in Knightsbridge for £27m.
The highest number of £10m-plus sales were in Kensington (26), followed by Belgravia (25) and Mayfair (22).
Several even more expensive London houses have recently come on to the market, including 2-8a Rutland Gate, a 45-room “private palace” overlooking Hyde Park with an asking price of £200m. Agents selling The Holme, a 40-bedroom villa within Regent’s Park, are also seeking offers in excess of £200m.
