"Buyers that were hesitant to move in 2023 due to high interest rates and inflation, are being lured back into the prime property market, increasing demand in key areas"
- Katherine O’Shea - Coutts
The capital continues to appeal to buyers hoping to secure a ‘discounted’ prime property, according to Coutts, with buyers managing to negotiate an average of 7.7% off the price of million-pound properties. In fact, three-quarters of all prime properties in the last quarter sold for less than the asking price.
Prices in areas which historically have been some of the most expensive in the capital have continued to offer buyers greater ‘value for money’. For example, Mayfair & St James’s saw house prices drop below £2,000 per square foot for the third quarter in a row, and high-end homes in Knightsbridge & Belgravia and South Kensington, are now 18.5% and 16.7% below peak levels respectively.
92% of prime properties in South Kensington were also sold at a discount, with buyers on average negotiating 11.3% off the asking price.
Conversely, certain areas of London, such as Bayswater & Maida Vale, saw a price boom in the last quarter. Here, prices reached new highs, with the average price per square foot reaching £1,523.
Whilst more million-pound homes were sold this quarter, with sale volumes up 27.2% compared to Q1, this could just be the start of the market heating up.
Across prime London markets there are currently 896 deals under offer, up 12% from the previous quarter. With inflation broadly under control and expected interest rate cuts, the second half of the year could see a spike in sales of million-pound homes.
Super prime performance
The super prime market has continued to perform well, with London maintaining its status as a ‘safe haven’ for property purchases amongst international buyers, who dominate this end of the market. Transaction volumes for homes worth £10m or more increased by 30% compared to last year. Kensington, Notting Hill & Holland Park dominated with almost half (47%) of all super prime sales taking place in this area.
The strength of the sterling relative to the dollar, in conjunction with the fall in house prices since the market peaked in 2014, means dollar buyers in certain parts of the capital are managing to secure a 44% discount on 2014 prices, bolstering the appeal of luxury homes in the capital.
Katherine O’Shea, Director of the Coutts Real Estate Investment Team, said: “Buyers that were hesitant to move in 2023 due to high interest rates and inflation, are being lured back into the prime property market, increasing demand in key areas.
“Though the market has struggled to recapture the peak seen in 2014, there has been some price growth since the pandemic. Buyers are still negotiating big discounts but that is starting to come down, suggesting there is more competition coming into the market.”
