Property prices for luxury homes in London are rising fast as buyers return to this market, cash in hand. In fact, the demand for this type of property right now is so high that it’s causing prices to increase at the fastest rate for seven years. Domestic buyers are largely fuelling the demand for luxury properties in London and, as international buyers return in the coming months, the spike is likely to get even sharper.
Luxury properties in London are hot
In March this year, average prices for prime London properties grew by 2.1%, which is the strongest rate of growth since May 2015. The signs for this market are wholly positive, especially as the number of prospective luxury buyers in the capital in Q1 this year showed an increase of 84% compared to the five year average. So, there is a wealth of interest in luxury properties and many more are preparing to buy.
Inquiries are on the up
The figures show that the number of inquiries across the whole of London rose 71%, compared to a 42% increase in regional markets during the same time period (the first quarter of this year). There is clear enthusiasm among prospective luxury buyers when it comes to London properties and the market is starting to return to pre-pandemic levels. It’s worth noting that prices are 16% lower than five years ago – but, given the level of interest, are unlikely to stay that way.
International buyers are set to return too
The market for international buyers of luxury London properties has already seen a wealth of positive activity – and this is going to continue alongside broader economic recovery. However, this is more likely to be gradual, as opposed to a rush to return to the London luxury property market. Next year looks set to be the year that luxury international buyers are back in the London property market in significant numbers, which will drive up price growth across the high-end property sector.
Prime outer London markets are changing too
The past few years have seen a substantial increase in demand for properties in primer outer London and this year growth has remained strong. In March 2022, prices increased 4.4% over the previous year, which is the strongest rate of growth since May 2015. However, growth in prime outer London markets isn’t set to continue – in fact, it’s forecast to peak this year. The demand of the past few years, driven by luxury buyers seeking out more space, is easing off. The rising cost of living, as well as an increase in mortgage rates, is likely to ensure that there is ongoing downward pressure on price growth in outer London as a result.
The central London market has always been popular with both domestic and international buyers. While demand dropped due to the impact of the pandemic, all the signs indicate that luxury buyers are returning with many more keen to invest, whether they are domestic buyers or purchasing from overseas.