In 2023, London’s residential market for properties valued over £5 million experienced a slowdown. Despite this, sales remained significantly higher than the average seen before the pandemic hit. A comprehensive market analysis by Savills revealed that there were 526 sales of both new builds and second-hand properties in this price bracket during the year. Although this number represents a 13% decrease from the record-breaking highs of 2022, it’s only a slight 2.3% drop from 2021 and is higher than any other year since 2013.
In terms of monetary value, these transactions amounted to a staggering £5.7 billion. Interestingly, properties sold for over £10 million contributed £3.2 billion to this total, marking a peak in value not seen since 2012-2019.
Analysis from Savills Experts
Frances McDonald, a research analyst at Savills, highlighted that the top tier of London’s market outdid the wider UK market in 2023, with transaction numbers remaining relatively stable. She pointed out that cash transactions and interest from international buyers played a critical role in this sector. Prices for high-value properties, favored by cash-rich and equity-rich buyers, remained steady throughout the year.
Looking ahead, McDonald anticipates a stable market in the near term, especially with the upcoming general election. However, she forecasts a price growth of 3.5% in 2025 and 6% in 2026, aligning with an expected global economic upturn and more stable domestic politics.
Hotspots for High-Value Sales
In 2023, half of all sales over £5 million occurred in prime London postcodes like Chelsea (12%), Kensington (11%), Belgravia (10%), Mayfair (8%), and Knightsbridge (7%). Alex Christian, joint head of the Savills Private Office, noted a shift back towards these traditional prime locations, driven by the return of international travel and the global wealthy’s renewed interest in the London lifestyle.
Christian also highlighted Belgravia’s growing popularity, thanks to significant investments in the area, including Eccleston Yards, which attracted a younger demographic. Knightsbridge is expected to experience a similar resurgence due to ongoing regeneration projects.
Trend Towards Flats
An interesting trend in 2023 was the dominance of flats in the £5m-plus sales category, making up 43% of all transactions – a record high since Savills began keeping records in 2012. Christian attributes this to the return of international buyers who prioritise design, finish, and service over larger spaces and private outdoor areas. He also noted a scarcity of larger properties in the market, with a limited new build pipeline.
Prime UK House Price Forecasts for 2024-2028
Savills’ forecasts for prime UK house prices from 2024 to 2028 show varied expectations. Prime central London is expected to see no growth in 2024, but then increase by 3.5% in 2025, 6% in 2026, 4% in 2027, and another 4% in 2028, cumulatively growing by 18.7% over five years. Meanwhile, outer prime London is projected to decrease by 2% in 2024 but then grow steadily, culminating in a 17.4% increase over the next five years.