The 27% increase underlines how a growing group of vendors are adjusting to the fact that demand is cooling, the result of uncertainty surrounding a future interest rate rise and the outcome of next May’s general election, according to the index report from Knight Frank.
‘As asking prices have become more realistic, more sales have been achieved in higher price brackets. It is particularly true for property recently put on the market, where vendors are typically more attuned to current supply and demand dynamics. Some sellers are also motivated by a desire to act before the election,’ said Knight Frank’s Tom Bill.
The result was a 17% increase in the number of sales above £5 million between January and August compared to the same period in 2013. That compared to a 7% rise across all price brackets.
Bill pointed out that this process of self correction in the sales market, which comes against the background of slowing growth in prime central London, demonstrates the resilience of demand.
The data also shows that annual growth was 7.7% in August after a monthly increase of 0.3%, which matched the rise in July. Monthly growth has not been as low for two consecutive months since a period four years ago in 2010 when concerns were intensifying over the euro zone sovereign debt crisis.
‘Though fears over the future of the euro zone have receded, a faltering economic recovery in the region has seen the re-emergence of safe-haven inflows into London property,’ explained Bill.
Italians were the biggest group of overseas buyers between January and August, accounting for 6%, followed by the French at 4.1% and Russians buyers at 3.8%. Italy’s economy has experienced a triple dip recession and Italian buyers have historically been active in London, a relationship potentially bolstered by Fiat’s decision to move its headquarters from Turin to London earlier this year.
Knight Frank's Prime Central London Sales Index has tracked the performance of London's luxury property market since 1976. Compiled monthly, the index is based on the valuation of a comprehensive basket of properties throughout our central London office network and is based on actual sales evidence.
