London’s £5 million-plus market records its strongest ever half year as buyers return to central postcodes

• 156 transactions took place in Q2 2022 alone - 13% higher than Q1 2022
• There have been 89 £10 million-plus sales in the first half of 2022, a +41% increase on H1 2021, and +94% on H1 2020
• Almost £3 billion was spent on £5 million-plus properties - the highest H1 spend on record - and 25% higher than H1 2021
• Sales in Chelsea, Belgravia, Kensington, St John's Wood, Mayfair and Knightsbridge made up half of all sales at £5 million and above

London's £5 million-plus residential market has recorded its strongest half year since 2006 (when records began), according to real estate advisor, Savills.

In total, there were 294 £5 million-plus transactions in H1 2022, for both second-hand homes and new builds, with 156 in the second quarter alone. This is 13% higher than the Q1 2022 total.

Even more remarkably, this figure is also almost as high as the total number of £5 million-plus sales seen across 2019 as a whole (308) and even higher than in the bounce-back years following the 2008 financial crisis.

Transaction volumes were bolstered by an uptick in activity above £10 million. In total, there have been 89 £10 million-plus sales in the first half of 2022, a +41% increase on H1 2021, and +94% on H1 2020.

As a result, the first six months of the year saw the highest spend for any H1 period since Savills records began in 2006 with almost £3 billion spent on properties worth £5 million or more. This is 25% higher than H1 2021 and 76% higher than H1 2020. This can partly be attributed to the number of £20 million-plus sales of both new build and second-hand property - which made up £762 million worth of sales, alone.

"London's super-prime market's stellar start to the year comes in response to the capital's return to normality as one of the world's most sought-after destinations - with restaurants, museums, galleries and shops finally coming back to life," commented Frances McDonald, research analyst at Savills.

"While both flats and houses have recovered on pandemic falls, there is still room for further steady growth as we head into the second half of the year, as there remains relative value on offer when compared to 2014.

"Although domestic buyers are continuing to dominate sales - this end of the market is less reliant on borrowing, reducing its exposure to further interest rate rises, and less likely to be impacted by the increased cost of living, so we don't expect growth to be affected in the short term. But unless high net worth foreign investors return in their pre-pandemic numbers, we anticipate continued moderate growth, rather than a great uptick."

High-net-worth buyers return to traditional postcodes

Traditional central London locations have also bounced back. Sales in Chelsea, Belgravia, Kensington, St John's Wood, Mayfair and Knightsbridge made up half of all sales at £5 million and above, in the strongest indication yet that both domestic and some international demand has returned to prime central London.

However, not all pandemic trends have petered out. Larger homes are continuing to dominate sales. Houses have continued to outperform at all levels of the super-prime market, as domestic buyers are still prioritising space, inside and outside of the home. Sales of houses made up 64% of all activity between £5-10 million (vs 36% for flats).

"While the vast majority of activity has been driven by domestic buyers over the past six months, we have seen an uptick in interest from international buyers towards the back end of the period. London still looks like good value in a historical context, with prices well below the 2014 peak, and the pound remains weak against the American, Singapore, and Hong Kong dollar, as well as the Chinese Yuan, meaning that London property is looking like an increasingly good investment opportunity to buyers in these markets," comments Alex Christian, London director at Savills Private Office.

"In particular, we have seen more Asian buyers return to the market over the past couple of weeks, who have been largely absent from the market due to Covid-19 restrictions on home soil, who no longer want to hold off on investing. New flats with top of the range amenities continued to be favoured by these buyers - but for the first time since the pandemic - we are also seeing overseas interest in large houses that require work, too.

"Above all, prime central London's reputation as a safe haven for international investment remains, and it is also seen as a secure bet to hedge against inflation. With all being well, we can hope to see demand increase at a steady pace over the second half of this year."

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