London’s most expensive homes are managing to defy a slowdown in Britain’s housing market.
(Bloomberg) — London’s most expensive homes are managing to defy a slowdown in Britain’s housing market.
New sales instructions for homes priced at £5 million ($6.2 million) or more were 74% higher in the final quarter of 2022 compared with the pre-Covid average, according to data compiled by researcher LonRes.
“In 2022, sales of £5 million plus homes, which account for just 8% of the prime London housing market, were 63% higher than their pre-pandemic average,” said Anthony Payne, managing director at LonRes. “It’s not surprising, therefore, that it tempted would-be sellers to put their homes onto the market.”
Britain’s housing market is facing disruption as it adapts to higher borrowing costs and the threat of a drop in house prices. Three of the nation’s biggest homebuilders last week reported a plunge in sales and hinted at more turbulence for the market in 2023.
That’s not yet playing out in the market for London’s priciest homes. Wealthy buyers are largely shielded from higher mortgage rates because they’re less reliant on debt when purchasing a home. Sellers are equally less likely to be forced into deals because of the rising cost of borrowing.
Given the discretionary nature of top-end sellers, vendors are more likely to withdraw their homes from the market than agree to cheaper deals. At the same time, the weakness in the pound against the dollar is tempting more international buyers to London’s luxury market.
The wider London market saw activity drop off in the last quarter of 2022 as borrowing costs soared amid spiraling inflation and increasing central bank rates.
“The final quarter of the year saw a change of direction,” Payne said in the report. “We’ll be keeping a close eye on how the market unfolds in the months ahead,” he added.
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