Momentum within London’s £5m-plus residential market slowed in 2023, according to Savills whole market analysis, but sales remain well above the pre-pandemic average.

According to Savills, a total of 526 sales – new build and second hand – worth in excess of £5m changed hands in 2023. While this is 13% lower than the record high in 2022, it is just 2.3% less than 2021, and higher than any other year since 2013.

In value terms, £5.7bn worth of £5m-plus properties transacted in 2023, with sales in excess of £10m making up £3.2bn  of the total amount. This is higher than any total value achieved between 2012-2019.

Frances McDonald, research analyst at Savills, said: “The rarefied top end of the London market outperformed the wider UK market in 2023 with transactions holding relatively steady.

“Cash and international buyer interest continue to play a pivotal role across prime London, which has resulted in prices for higher value properties – synonymous with cash and equity rich buyers – remaining steady over the course of the year.

“We expect values to remain flat this year in light of the looming general election, but forecast price growth of 3.5% in 2025 and 6% in 2026 once the global economy picks up more significantly and domestic political instability subsides.”

Demand for smaller properties in traditional postcodes remains strongest

Half of all sales in excess of £5m in 2023 took place in traditional prime postcodes Chelsea (12%), Kensington (11%) and Belgravia (10%), Mayfair (8%) and Knightsbridge (7%).

“In 2023 we saw a rebalancing back in favour of the prime postcodes that traditionally dominated £5 million-plus sales pre-pandemic, driven by the return of international travel for business and leisure, and the global wealthy once again looking to buy into the London lifestyle,” commented Alex Christian, joint head of the Savills Private Office. “Domestic buyers who shaped the market in the two years prior helped put leafier locations beyond prime central London on the £5 million-plus map.”

He continued: “Belgravia, in particular, has jumped back in popularity over the past 12 months, thanks to significant investment into the area and an evolved retail and restaurant offering, specifically Eccleston Yards, which has brough a younger demographic to the area. We can expect to see Knightsbridge follow suit with the regeneration currently underway.”

In 2023, flats made up the highest percentage of £5m-plus sales across London since the Savills records began in 2012.

Flats  made up 43% of sales in 2023 – vs 41% in 2022 and 28% in 2021, according to Savills.

Christian added: “This is in part due to the return of international buyers who are often less concerned about larger floor plates and private outdoor space than quality of design, finish and service. Our buyers are hugely successful and time poor, so demand is focused on best in class properties, particularly at the top end.

“There continues to be a scarcity of larger stock on the market, with a very limited new build pipeline. However, owners are beginning to show greater commitment to coming to market, in order to take advantage of current buyer positivity,” concluded Alex Christian.

Prime UK house price forecasts 2024-2028

Source: Savills Research