As the world emerges from the global downturn, London has cemented its position as the world’s number one destination for ultra-premium real estate.
And despite continuing economic concerns and mounting fears over the implications of a housing bubble, the mega-rich are still flocking to invest in a physical slice of the capital.
This trend has seen the number of London homes selling for over £5m has jumped by more than 25% over the last year.
More than 500 homes priced higher than £5m changed hands, with a collective worth of £5.2bn. Of those, 160 were valued at more than £10m, according to estate agents Savills.
The most expensive sale to go through the Land Registry in London last year was for a £29.35m apartment at the iconic One Hyde Park development in Knightsbridge.
But it is likely higher value properties have changed hands through off-shore businesses, the details of which have not been made public.
The high level of top-end sales suggest that the London residential market is yet to suffer fall-out from higher stamp-duty for expensive properties, or from Lib Dem and Labour’s proposed ‘mansion taxes’.
But, Savills boss Lucian Cook said that taxes may have had some effect.
Speaking to the Standard, he said: “[The taxes] have taken some of the heat out, for sure, but have not resulted in wholesale erosion of the attraction of London. Tax is just one of the attributes that makes London what it is as an investment proposition”.
He said he expected London house prices to rise by a further 23% over the next five years, unless major changes to taxation came into force.
Of the 500 homes worth more than £5m, 23% were in the SW1 postcode, which covers Belgravia, Knightsbridge and St. James’s; Kensington W8 followed with 14%, Chelsea SW3 with 13% and South Kensington SW7 with 10%.
Tip of the iceberg
Basement excavations have been a driving force in driving up London’s house price boom, with houses in Kensington & Chelsea seeing planning applications for “dig downs” increasing by 50% year on year.
Such excavations have become known as ‘Iceberg’ homes, as goliath subterranean developments have meant that many homes are greater in size below ground than above.
Applications have also risen considerably in Wansworth and Hammersmith & Fulham, which have seen rises in basement building applications of 34% and 42% respectively.
Average house prices rose by more than a third in those areas over the same period.