Luxury home cash purchases account for 70 per cent of transactions in London

Luxury home purchases 'on the cheap' account for 70 per cent of transactions in London

Luxury homes being built in London Getty images

8 September 2023, 11:00

The prime housing market is moving at a different pace to the rest of the residential market, no matter the destination. The real estate consultancy Savills says that more than 70% of luxury property purchases in London were made in cash between January and May this year. This is 11 points more than the same period in 2022. The number of cash transactions for high-end properties on the outskirts of the British capital has also increased to 35%.

This growing trend in the luxury housing market comes amid rising mortgage rates in the UK, fuelling the resilience of the UK capital's prime property market. According to Moneyfacts data, the average five-year mortgage rate is already above 6%.

According to Savills, luxury buyers with equity bought 71% of prime central London properties between January and May this year, compared to 60% at the same time last year. Compared to pre-pandemic figures, the increase is 10 points - 61% between January and May 2019.

The estate agency's research highlights the contrast between house prices in prime areas of central London, such as Mayfair, Westminster and Marylebone, where cash buyers are more prevalent, versus prices in the outskirts, where purchases are more mortgage-dependent and, therefore, more sensitive to rate rises.

Prices for properties over £5m, or around €5.85m, were stable in Q2 2023 compared to the same period in 2022, with a slight drop of 1%. Luxury house prices remain 3.9% above the figures seen before the pandemic.

While in the £500,000 and £1 million bracket (€585,300 - €1.17 million), they fell by 2.1% year-on-year. House prices below half a million pounds also fell by 2.5%.

Rupert des Forges, a partner at estate agency Knight Frank, said that pockets of wealth are moving out of places like Turkey, Scandinavia and the west coast of the US and into London.

In outer London, luxury residential transactions accounted for 35% of the total between January and May 2023, compared to 26% in the same period in 2022. Outside London, the value of high-end properties fell by 3.5% year-on-year in the second quarter.

Article seen in (Financial Times)

Cash buyers snapping up more high-end London property, research shows