Momentum within London’s £5m-plus residential market ramped up in the third quarter of 2023, according to new analysis from Savills.

The high end agency says the surge is driven by demand for world-class apartments in prime London postcodes.

Savills whole market analysis reveals that there were a total of 145 sales worth in excess of £5m (new build and second hand) in Q3, up from 137 in Q2, and 108 in Q1 2023.

In total 390 properties worth in excess of £5m have so far changed hands in 2023, lower than the 459 in first nine months of 2022 – a record year – but still seven per cent above Q1 to Q3 2021, and well above the pre-pandemic Q1 to Q3 average of 233 for the pre-pandemic years 2017-19.

In value terms, almost £4.3 billion worth of £5m-plus properties have transacted year to date, according to the Savills data. £1.7 billion worth of sales took place in Q3 alone.

“Prime markets generally have remained comparatively robust this year, but the latest data for the very top end of the London market underscores the remarkable resilience of the city’s prime central locations. We’re seeing a particular focus on turnkey flats and a slight shift away from larger houses with outside space which topped buyers’ wish lists during the pandemic” comments Frances McDonald, director of residential research at Savills.

“But, despite London’s resilience, price sensitivity is likely to continue into 2024, particularly as we approach the next general election. There are clear headwinds but we continue to expect prime central London to outperform all other UK residential markets, not least because of its standing in an international context and that global wealth generation is expected to continue growing.”

Traditional prime postcodes Chelsea, Kensington and Belgravia saw the highest number of £5m-plus sales take place in Q3.

There’s also been a revival in the demand for flats, driven by the launch of a number of world class developments over the last quarter. This demand is also as a result of apartments of this type in prime postcodes becoming even more scarce, as planning policy changes in some prime London boroughs will limit the size of new homes being built. 

Year to date, apartments have made up the highest percentage of £5m-plus sales since the Savills records began in 2012.

According to Savills, apartments made up 45 per cent of sales in Q1-Q3 2023 – vs 40% in 2022 and 28% in 2021.

Sales within the even more rarefied £10m-plus market have also picked up considerably. According to Savills, 120 properties exchanged in excess of £10m in the first nine months of this year.

Again, this is lower than the 143 in Q1 to Q3 2022, but considerably higher than Q1 to Q3 2021 (97 sales) in 2017-19. 

Alex Christian, joint head of The Private Office at Savills, comments, “The resilience of demand in this market is a big vote of confidence in London and a continuation of the post-Brexit, post-Covid recovery.

“The apartment market, in particular, is driven by global wealth, with buyers often buying their first London home, whereas houses are favoured by UK buyers or those from around the world who’re fully settled in London, some buying for the second or third time as family needs evolve. An awareness that the pipeline of large new build properties will be all but sold out within five years, plus the fact there is barely any stock of turnkey houses coming to market, continues to underpin activity and values across prime central London.

“Prime London residential values look historically cheap, particularly when the currency advantage if factored in, and for many this feels a very good time to be buying.”