Savills : London £5m+ home sales count strongest for 5 years as 2020 ends on a high

The UK may have entered recession in 2020, with international travel put on hold by the pandemic, but the capital's prime residential market recorded more £5 million-plus sales than in any year since 2016.

In a clear demonstration of confidence in London as a leading world city, new analysis from Savills suggests London saw 348 sales above the £5 million price point in 2020, an increase of 12.3% on 2019. The total value of these deals was £3.74 billion, 8.7% higher than the total for 2019 and just below the 2018 total.

'The surprisingly strong market performance against a deeply uncertain economic backdrop, tells us that buyers recognise the relative value on offer across London's highest value markets,' says Frances Clacy, Savills research analyst. 'And although international travel restrictions have reduced the number of potential buyers at this level, it has given the advantage to those already living in the capital.'

A very strong start to 2020, thanks to a definitive general election result in December 2019, saw 97 transactions cross the line in the first quarter. Lockdown triggered a short lull, before a surprising rebound in activity levels in the second half of the year.

This meant 2020 finished on a high, with 102 transactions at this level in the fourth quarter alone, despite intense uncertainty around the Brexit negotiations towards the year end and the prevailing constraints due to Covid-19.

Across the year as a whole, just under a third of total sales in this bracket were worth in excess of £10 million, with 104 such sales, only two below the 2019 total. The market above £20 million had a particularly strong year end, with 11 sales in the final quarter, six of which were new build.

In value terms, a total of £1.23 billion of £5m+ property was transacted in the final quarter of 2020, the highest of the year, taking the total to £3.74 billion. New build transactions made up 27% of the total value (£1.01 billion) despite only accounting for 18% of deals.

Total Volumes	Total Values, £billions
All sales over £5m in London	£5m-£10m	£10m+	Total	All sales over £5m in London	£5m-£10m	£10m+	Total
2020	244	104	348	2020	£1.65	£2.09	£3.74
2019	204	106	310	2019	£1.37	£2.08	£3.44
2018	219	114	333	2018	£1.49	£2.50	£3.98
2017	234	106	340	2017	£1.56	£2.07	£3.62
2016	235	116	351	2016	£1.59	£2.46	£4.05

Source: Savills Research all market monitor

Lockdown and travel restrictions change shape of demand:

Analysis of £5million-plus second hand (as opposed to new build) transactions across the Savills residential agency business reveals that whilst in 2019 more than two-thirds (69%) of purchasers were international (both overseas and UK-based), that figure fell to 53% in 2020.

'This suggests that while non-dom London residents re-affirmed their commitment to the UK capital, domestic buyers also saw the 'buy' opportunity in the market,' comments Clacy.

The 2020 trend seen across the wider prime London market that saw buyers seeking more space, was also manifest at the top end of the outer prime London market. The leafier suburbs of south and west London such as Barnes, Battersea, Chiswick, Clapham Common and Richmond accounted for a total of 22 sales last year, double the 2018 figure and up from 15 in 2019.

However, this high price tag remains a rarity in the outer prime London market with the majority of demand still concentrated in central London's well established postcodes. Sales in SW1, W1, W8 and SW3 made up more than half (52%) of all £5 million-plus sales last year, while the search for gardens and proximity to green space saw W8 - a postcode adjoined by Holland Park and Kensington Gardens - overtake SW1 or SW3 for the number of £10 million-plus second hand sales in 2020.

'Despite increased activity, prices across prime central London still remain almost 21% below their 2014 peak. While a 2% stamp duty surcharge for non-resident buyers is due to be introduced in April, the capital's buy, hold and sell costs will still remain competitive compared with other world cities. This points to a good 'buy' opportunity, particularly for those transacting in foreign currencies.

'History tells us that these markets rebound quickly. Given the challenges of last year, the resilience of the London market was extraordinary and this can give us confidence going into 2021. Of course we remain mid pandemic and that means further uncertainty, but the rollout of vaccines internationally means we can look forward to the reopening of travel corridors, meaning we expect prime central London activity levels to continue to recover from the spring.'