London’s Luxury Homes Outperformed the Rest of the U.K. Housing Market

Luxury home sales in London outpaced the rest of the U.K. housing market in July as rising mortgage rates had less of an effect on big-ticket deals, according to Knight Frank’s latest prime London market report.

Prices across London’s core luxury neighborhoods slipped 0.9% in July compared to a year ago, though nationwide, home values fell by several times more in the same period. Prime outer London, which includes neighborhoods such as Canary Wharf, Richmond and Hampstead, was even more resilient, as prices slipped only 0.2% compared to a year ago. 

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High-end sales greatly outperformed the rest of the country, with deals rising 13% over the five-year average in July. By comparison, overall U.K. home sales were down 5% over their five-year average, according to Knight Frank’s report Monday.

Part of the resilience comes down to the higher proportion of all-cash buyers. Around half of the buyers in Zone 1, a region of the city center that includes core luxury neighborhoods like Belgravia and Mayfair pay cash, according to government data cited by Knight Frank. 

Some parts of the city favored by foreign buyers performed particularly well in July, including Knightsbridge—home to famous department store Harrods—where average prices rose 3.3% annually. 

But the prime London market isn’t totally immune to interest rate rises and inflation. Economic uncertainty and price falls are still weighing on buyers and sellers, according to Tom Bill, Knight Frank’s head of U.K. residential research and author of the report.  

“The prime London property market has not been immune to this uncertainty,” Bill wrote. “The discretionary nature of higher-value markets in the capital means demand has cooled while the outlook remains unclear.”

The original article can be found here

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