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September 1, 2022
Jeremy McGivern
Posted in: Luxury real estate London

London’s Luxury Property Market: What You Need to Know

Luxury property in London | 

If you want to discover what is happening in London’s Luxury Property Market there is masses of information on google.

In fact, I have just typed the term ‘luxury property in London’ into the google search bar and it has produced “about 47,000,000 results”.

Unfortunately, at least 95% of those 47 million articles will be misleading at best and downright inaccurate at worst. Why? Because the search term is far too general – London’s luxury property market is made up of dozens and dozens of markets. If you don’t understand what makes them differ then would it be unfair to say that you will probably make a very expensive mistake?

For example, there are the geographical areas like Knightsbridge, Belgravia, Mayfair, Chelsea, Kensington, Notting Hill, etc., which can vary massively in terms of price as well as what is actually happening in terms of price movements within those markets.

Then there are the markets within those areas. For example, the £500k to £1m market will be very different to the £3-5m market in the same area – there will be varying levels of buyers, properties available, etc. in each price bracket.

Then there is the difference between what is happening to terraced houses, detached houses and apartments. And this is just scratching the surface, so do you think it makes sense to rely on articles and information that discuss the luxury or prime London property market but don’t cover the differences within the various markets?

So, what do you need to know about London’s luxury property market?

Well, the estate agents and press like to come up with new descriptions for areas depending on the area and price range. For example, “super prime” or the even more ghastly “uber prime” are two ways they have decided to describe the top of the market.

Mayfair, Knightsbridge and Belgravia tend to be regarded as the “super prime” areas but this only pertains to properties worth at least £20m. The most expensive property to have sold recently in terms of capital value was a house in Rutland Gate that was acquired for c. £210,000,000. There have also been a handful of apartments that have sold for over £100m.

In reality though, this isn’t really a market but a very small number of acquisitions for a very specialised “product”.

In short, I would ignore any jargon or attempts to aggrandise certain areas. Just focus on the facts (if you can find them…).

london's luxury property market

Where are property prices rising fastest in London?

This is one of the questions that I am asked most often by my clients. As you may have guessed, the question is too general and you need to focus on what is happening in your target area, price range and style of property.

For example, at the time of writing, houses in Notting Hill with direct access to communal gardens are up c. 20% this year. Meanwhile, two bedroom apartments without outside space in Notting Hill have barely moved in price.

This is why information about what is happening in general in an area is so misleading. If you were buying a 2 bedroom flat but thought that prices were going up rapidly because of data skewed by what is happening in the housing market, you would make a very bad decision.

However, as people like generalisations, houses in areas like Kensington, Fulham, Clapham, Chiswick have performed particularly well in the last 18 months. This is in large part due to people wanting to upsize and have a garden after the pandemic.

Please note that some of these areas are not regarded as prime London.

Are Luxury London property prices falling?

The current concern in the press is that prices will fall because of:

  1. Higher interest rates
  2. The increased cost of living
  3. Continuing uncertainty caused by the war in Ukraine
  4. Weakness in the stockmarket

In fact, the number of articles in the press that are predicting a house price crash is extraordinary, but then that is par for the course. Stories about property crashes are more likely to attract readers!

The good news is that these predictions are almost always wrong. Please note, that I am not saying that London property is a bulletproof investment, because it most certainly is not – there is a clear cycle of booms and busts. It is just that the talking heads and “experts” in the press have a woeful track record when it comes to making predictions.

This is something that I highlight in the talks I give for private banks, solicitors and tax advisers. I can’t go into too much detail here but let me quickly debunk the current conventional wisdom which says that higher interest rates mean lower property prices.

If that was the case, then when interest rates rose from 3.50% in July 2003 to 5.75% in July 2007 surely prices should have at the very least stalled if not crashed? And yet, the average house price in the UK increased 44% and the average house price in Kensington & Chelsea increased 87%!!

Quite simply, other forces drive the property market other than interest rates. Unfortunately, mainstream economists seem unable to acknowledge this despite the facts staring them in the face.

london's luxury property market

Will London property continue to rise?

Part of the current confusion over what has happened to prices has been the disruption caused by Brexit and then Covid.

Many commentators said that Brexit would be particularly disastrous for prime central London property and prices (in general) did fall from 2015 to 2020 but Brexit itself was not the main cause of this. We had:

2014 – a huge increase in Stamp Duty Land Tax

2016 – Brexit and a change of Prime Minister

2017 – A hung parliament after Theresa May’s catastrophic campaign meant she lost a huge lead in the polls

2017-2019 – The fear that Jeremy Corbyn might win the next election and bring in insane policies that would cripple the UK and target the wealthy.

In short, there was a huge amount of political uncertainty which historically has always affected London property prices more than any other region. What was strange about this period was that it is the only time that I am aware of when the typical buyer of prime London property was becoming wealthier, but prices fell.

And as soon as the Conservatives won a landslide victory in the December election of 2019 prices jumped, but only briefly because then the pandemic was on us. This once again led to predictions of calamitous price falls – the Bank of England predicted prices in the UK would fall 16% – but prices have been going up for 18 months and are roughly 17% higher!

I expect prices to continue rising for a number of years before we see another crash. There are multiple reasons for this which I don’t have time to go into here, but if you hear an “expert” tell you that higher interest rates will guarantee a crash or that the house price to earnings ratio is too high so prices must fall, they are wrong.

Contact Mercury Homesearch

I can prove conclusively that these two indicators are very poor for predicting property crashes, so if you would like to discover more about what really drives property prices in London and has done so for over 300 years, simply email me at jeremy@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK).

Topic: Luxury property in London

About the author, Jeremy McGivern

My name is Jeremy McGivern. I am the founder of Mercury Homesearch, the internationally renowned property search consultancy, and author of The Insider’s Guide To Acquiring Luxury Property in Prime Central London. I have been acquiring property in prime central London for clients for over 13 years.

Having physically viewed over 22,000 properties in prime central London, studied the details of over 153,400 apartments, houses and investment opportunities and spoken to 232+ estate agents every week for over a decade.

My advice is in high demand and has featured everywhere from Bloomberg Television, The Financial Times and The Daily Telegraph to Forbes India and Bahrain Confidential.

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