Political uncertainty has affected sentiment over the last five years, however, this has intensified as the UK’s intended departure from the European Union continues to be discussed, combined with the impact of wider global economic tensions.
However, higher-value sales are increasing, as high net worth individuals target London and take advantage of the weak pound. There were 16 transactions above £30 million in the year to May 2019 compared to 11 over the previous 12 months.
Furthermore, pent-up demand remains strong. The ratio of new prospective buyers to new sales listings above £10 million climbed to 6.5 in the third quarter of 2019, the
highest figure since the final quarter of 2016 and the second highest figure since Q1 2014. Meanwhile, the average age of super-prime buyers is falling as figure 5 shows. Some 73% of super-prime buyers were below 50 in the year to September 2019, which was up from less than half at the start of 2015.
Paddy Dring, global head of prime sales at Knight frank, explains:
“The growing number of £30 million-plus transactions taking place is extremely encouraging. There is a growing realisation on the part of vendors that the market has re-priced. The currency advantage is still driving demand. There are some sizeabletransactions underway and there is an equally sizeable pool of latent demand building up.”
Rory Penn, joint head of Knight Frank’s Private Office, says:
“Beyond Brexit, there are global trade and geopolitical tensions that mean other super-prime residential markets have slowed. While there are fewer discretionary buyers in London, well-priced and good-quality stock is getting strong interest and leaves me convinced that demand will accelerate once Brexit has been resolved.”
Victoria Garrett, head of residential, Asia-Pacific at Knight Frank, explains:
“We have seen strong appetite for the London market from buyers in Asia. A combination of the currency discount, relative political stability and a world-class education system means London is the logical choice for many buyers at the super-prime level. When more clarity around Brexit emerges and there is more currency stability, much of the pent-up demand will be released.”