2012 breaks record for super prime London residential sales

A record number of London homes worth £5 million plus changed hands in 2012 as demand for the capital’s residential real estate remained strong in spite of increased taxation, says international real estate adviser Savills.

Last year there were just over 400* sales in London worth in excess of £5 million, with a total value of over £4.1 billion, suggesting that buyer confidence in this sector of the market has largely absorbed the increased shock of increased taxation announced in the spring Budget.

Super prime properties are now valued at 32 per cent above peak, compared to 23.9 per cent for the prime central London average, according to the Savills prime central London index.
Sales continue to be heavily concentrated in the golden postcodes. Two-thirds of these top sales were in the core central postcodes of SW1 (Belgravia), SW3 (Chelsea), SW7 (Knightsbridge), W8 (Kensington) and W1 (Mayfair).

The total value of deals in this sector was slightly down on the 2011 peak, a reflection both of lower levels of stock in the very top tiers of the market and a reduction in the exchange rate advantage for most overseas buyers. There were 62 known sales worth over £15 million in 2012, compared to 72 in 2011.

Total prime central London market- £5m+ sales
A 6.4 per cent value boost over the course of 2012 (compared to the prime London average of 5.0%) has also boosted the £per square foot value of £5million plus properties in London. The average value climbed to a record high average of £2,370 per square foot, marginally higher (+3.1%) than in 2011. Ultra prime properties worth over £15 million achieved over £3,000 per square foot, demonstrating a clear premium for scale.

New build on top again
The super prime market was boosted by particularly strong levels of new build sales as more stock entered the market. For the first time since 2006, sales of new build homes worth over £5 million exceeded 50, with a total value of over £600m.

This high end new build stock carried an identifiable premium given its ability to meet the demands of ultra wealthy overseas buyers. Average values of £3,329 per sq ft were 53% higher than the equivalent figure for second hand stock in this price range.

"Transactions in the super prime market appear to have been much less affected by the tax changes,” says Lucian Cook, director of Savills residential research . “At this end of the prime market, housing wealth tends to be a much smaller proportion of a buyer's total wealth. This suggests that it will outperform over the next 5 years and should be less susceptible to a slowdown in the coming year."

* Analysis by Savills research and reflective of all known market sales.

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