London’s high-end property market, known for its luxurious and exclusive real estate, is facing a slowdown in sales, signaling a significant shift in the global property landscape. This comes amid a broader downturn in residential sales worldwide, raising concerns among investors and homeowners alike. Here’s a breakdown of what’s happening and what it means for the super-prime property market in London.
Global Property Sales on a Downward Trend
Residential sales in many of the world’s mainstream markets have seen a substantial decline, plummeting by 20% to 30% year-on-year. This drop is largely attributed to the skyrocketing finance costs over the past year. Higher borrowing costs have drastically affected affordability and accessibility for potential buyers, leading to a widespread market slowdown.
Super-Prime Markets: A Comparative Resilience
Despite the overall downturn, the global super-prime markets, which include the most luxurious and expensive properties, have shown a degree of resilience. According to recent data from Knight Frank, a leading property consultancy, super-prime sales globally fell by just 2.4% in the third quarter (Q3) of 2023 compared to the same period last year. This indicates a somewhat stronger performance relative to the broader market.
London’s Super-Prime Market: Current State
In the super-prime segment, London has experienced a decline in sales during Q3 this year compared to Q3 2022. It now ranks second, after Dubai, in quarterly sales, with Hong Kong closely following in third place. This represents a noticeable change in the dynamics of the super-prime property market, with London traditionally being a frontrunner in this sector.
The Role of New-Build Completions
The super-prime market is uniquely influenced by new-build completions. The robust sales volumes seen in 2021 were partly due to delayed completions from 2020. Interestingly, some of the current strength in global numbers, particularly in London, has been supported by completions in luxury schemes initiated before the pandemic.
Looking Ahead: A Forecast for 2024
Weakening Tailwind from New Builds
The outlook for 2024 suggests a diminishing influence from new build sales. The lower volume of new project starts during the pandemic is expected to start impacting the market. This means that the boost seen from new luxury developments in recent years is likely to taper off, potentially leading to a further slowdown in the super-prime property sales in London.
In summary, while London’s super-prime market has shown resilience in the face of global market challenges, its future seems less certain. The reduced number of new luxury projects, coupled with the broader economic context, suggests that we may see a continued decline in this exclusive segment of the property market. This anticipated change represents not just a shift in the luxury property market, but also reflects broader economic trends affecting high-end investments worldwide.