Despite Brexit, looming expectations of a UK recession, and the loss of Russian custom, it appears the rich will sustain London’s prime housing market, according to estate agent Savills.
The collapse in the value of the pound has led the global super-rich to snap up around 61 of London’s luxurious properties in the first six months of 2022, each worth over £10m.
With factors such as Brexit, Russia’s invasion of Ukraine and Boris Johnson’s resignation as Prime Minister, the pound has significantly weakened since the beginning of the year. As a result, overseas property buyers have flocked to the London Luxury Homes market in search of “a deal”.
It appears that billionaires have enjoyed a huge accumulation of wealth over the last couple of years, which has grown at an unprecedented rate in human history, according to a report from Oxfam International. It is also reported that billionaire wealth has grown more since the start of the pandemic than it has in the last 14 years. It is believed that the main driver of this was government intervention around the world, which propped up economies and drove up stock prices.
This, combined with the availability of ‘billionaire mortgages’, seems to have triggered a purchasing spree of luxury homes in Central London, which is reported to continue despite the expected recession. Over the last six months, the average price of a property sold by Savills has grown by 16% to hit £2.2 million.
The founding director of Beauchamp Estates, Gary Hersham, said that the volume of £15m-plus deals in London’s prime housing market had doubled during 2021. Super rich buyers had access to a great supply of preferential-rate, interest-free mortgages which enabled them to borrow at rates below the rate of inflation—meaning they were essentially borrowing for free.
It appears that the London luxury homes market has not suffered from a lack of Russian property investment following sanctions imposed due to the invasion of Ukraine. Some agents have said that the flurry of recent activity may have been sparked by foreign buyers rushing to complete their purchases before the introduction of new rules that came into force on August 1st, which will require overseas buyers to declare their ownership.
Savills believes that the capital’s prime property markets will ride out the cost-of-living storm. Cash-rich buyers are also less exposed to rising interest rates as they tend to borrow less when investing in a new property.
London’s luxury homes make for a stable investment in an increasingly turbulent and uncertain climate, and some believe that 2022 could be the best year in the last decade for the city’s super-prime property market.
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