HOW THE CAPITAL HAS \BOUNCED BACK
Despite a start to 2021 that plunged us straight into lockdown during what felt like one of the longest winters in living memory, 2021 proved to be one of the busiest on record in the prime London market.
At the height of the global pandemic in 2020, escape to the countryside was paramount for many wealthy London families. But attention is turning again to the capital, for the buying opportunities it offers in prime areas such as Kensington and Belgravia while most international buyers are still absent – and on the back of a few years of stifled price growth.
More prime London properties sold in the first five months of 2021 than in any time since peak 2014, according to LonRes. And though London’s price growth has trailed behind the rest of the UK – where sales at low price points were fuelled by the stamp duty holiday - the return of foreign buyers, including wealthy international students, is likely to bring a renewed boost to the London market later in 2022.
Meanwhile, domestic buyers are keen to get on with life after years on the fence, and large family houses with gardens, in particular, are selling fast, in some cases before they even come on the open market. The pied à terre market is also strong as buyers who made a rural move last year contemplate the commute back into the city two or three times a week in coming months.
“The prime London market was already soft when Covid hit, on the back of the Scottish and EU referendums and the long Brexit process, but we’ve seen a tidal change in mindset over the past few months and activity is strong, even before many people have returned to offices. It has been about five years of people feeling their life is on hold a little and they are ready to move on now,” comments Louis Harding, Strutt & Parker’s head of London Residential Agency. “Prime central London started about 20% down on peak 2014, price wise. And based on transactions year on year, London sales activity for 2021 was up 45% on 2020 and 20% on 2019.”
The maximum £15,000 saving afforded by the stamp duty holiday launched in June 2020 made little tangible impact to many £1m+ London purchases – but it has served to give buyers that extra push and powered sales lower down the ladder so that higher-priced house moves could go ahead.
Virtual purchases continue to take place too, while international travel remains restricted, and for some buyers, a 3D walkthrough on a proptech platform such as Matterport, or even a virtual tour by Facetime, is enough to convince them to commit. “They are usually second, third or fourth homes at the discretionary end of the market. We just sold a £13m house in Notting Hill sight unseen, to a buyer who already knew the area and street well,” says Harding.
Sarah Conway, partner and head of real estate at the boutique private wealth law firm Maurice Turnor Gardner, adds that virtual viewings have been enough to convince many of her UHNW clients to purchase off-plan in new prime central London developments. “The marketing by developers is extremely well done, so clients can see what the finished product will look like. Branded residences are also proving popular for our international clients as they have the benefit of being aligned to a hotel, with all the services and facilities they want without having to leave the building.”
As of April 2021, non-resident buyers in London must factor in an additional 2% stamp duty levy. Many overseas clients, however, benefit from the “extremely favourable” currency play, says Conway, referring specifically to US, Asian and Middle Eastern clients entering the new-build market. “Prime central London will always be a good investment. Rather than seek an investment they will rent out, a number of our clients will buy and hold, looking at the capital growth over the next five to 10 years,” she comments.
It’s a very different picture, now, to the panic buying seen in London after the first lockdown. The Covid vaccine is part of our lives, international travel – “the missing link in our market,” says Harding – is starting up again, and the capital is beginning to look like its old self again. “There is definitely potential for a Roaring Twenties. People have missed London, which is such an international city, and they’ve missed the hotel experience,” says Harding.
With London’s new upscale branded residence schemes, buyers have the opportunity to enjoy the best of all worlds.