London’s wealthy pay top prices for luxury homes in the city

London's wealthy pay top prices for luxury homes in the city

(Bloomberg) – Buyers of luxury homes and penthouses in London are finding it difficult to find good properties.

The sale prices of houses with a transaction value of more than 10 million pounds (11 million euros) averaged 95% of the asking price in the second quarter, according to a report by broker Knight Frank. This is the lowest discount since the end of 2016.

Hard Bargain

© Bloomberg
Hard Bargain

“The market has picked up given the pent-up demand and scarcity of supply,” says Paddy Dring, Global Head of Prime Sales at Knight Frank. “Covid has resulted in people not selling unless they absolutely have to.”

UK home sales had plummeted after the government practically freezes the market for six weeks through mid-May in an effort to stem the Covid-19 outbreak. The luxury home market has been slow to recover, while prices for less expensive homes have have increased significantly.

Still, there were some mega-deals in London. Developer Christian Candy bought a property overlooking Regent’s Park for about £ 104 million, Bloomberg had in June reported. Polish billionaire Dominika Kulczyk bought a house near Harrods for £ 57.5 million earlier this year.

In total, according to the Knight Frank Report, £ 1.1 billion was spent on luxury real estate in the first eight months of this year. The number of transactions was roughly the same as last year, driven by an increase in the first quarter.

Right now, it doesn’t look like prices for the most expensive properties in London will fall much further after falling in recent years, says Rory Penn, head of the private office at Knight Frank. “There is no sign of another 10% slide overnight,” he said.

Given the restrictions on international travel, the report found that UK buyers accounted for 40% of transactions in top-end London homes, the highest proportion in a decade. The easing of these restrictions will be a key factor for transactions in the fourth quarter.

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