Super-prime sales resilient in 2020 due to domestic demand and the search for space.

Buyers dropped nearly US$4bn on $10m-plus properties in the UK capital in 2020, putting it ahead of traditional rivals New York and Hong Kong in the luxury real estate stakes.

The analysis by Knight Frank shows there were 201 super-prime transactions in London, averaging out at $18.6m apiece. Hong Kong saw 169; New York just 117.

New York’s super-prime market had a particularly tough year, what with the presidential election slowing things up and the impact of the Covid-19 lockdown between March and July. But while sales were down, the average price increased by 5% annually as buyers honed in on larger homes. Meanwhile, super-prime deals soared in US coastal hotspots, like Miami (89 at $10m-plus was more than double the previous year’s tally), LA and Palm Beach.

Worldwide, the super-prime spend totalled $19bn in 2020, which was 5% below the previous year’s figure. Overall volumes were only 1% lower, however.

Transactions over US$10m*

Prime London market busier than post-election bounce, as high-end sales continue to soar

After a small fall in the number of homes going under offer in January, February saw under offers increase. The number of homes put under offer in February was up 9% on the same month a year ago and 19% higher than the five-year (2015-2019) February average.

Sales volumes rose too, with February recording an 8.8% increase in sales (exchanges) this year compared with last. Comparing sales by price band over the last three months (December to February) shows that sales increased across the board. But it was the £5million+ market which continued to record the highest annual rises, up 19% on the same three months a year earlier.

Over the last three months (December to February) achieved prices across prime London fell by 1%. Both homes selling for below £1 million and above £5 million saw small increases with properties sold between £2 million and £5 million recording a 3.5% annual fall.

Looking ahead continued growth in under offer volumes means that the sales pipeline is well placed for further growth in the coming months. However, there remain some challenges ahead, most notably when overseas buyers can return. But we still expect good things from London’s prime market this year and buyers appear to feel the same.

Birmingham projected to see highest property price growth between 2021-2025

Prices in Birmingham are forecast to grow 19.5% between 2021 and 2025, Manchester an 18.5% rise is predicted while Prime Central London will see an 18% growth. These key locations are predicted to outperform the UK national growth average of 14.5%.

Prime Central London

The acute housing undersupply issue in Greater London will be exacerbated by COVID-19 with new housing starts falling to an average of 12,500 pa over the next 5 years, compared with a housing need for 52,000 homes pa. This will underpin price and rental growth in the UK Capital.

Having already fallen in Prime Central London in 2020, prices and rents will begin to grow again in 2021. As the downturn begins to abate wealthy global investors will turn their attention to Prime Central London, one of the world’s most exclusive housing markets, as they did after the Global Financial Crisis.

House price change (%pa)

Rental value forecasts (%pa)

Source: JLL

Birmingham

Of all the housing markets that JLL monitors, Birmingham is forecast to see the strongest house price and rental value growth over the next 5 years.

HS2 and the 2022 Commonwealth Games are Important catalysts for growth in Birmingham. The city is also seeing a growing housing shortfall. However, Birmingham City Council is seeking to accelerate the regeneration of council owned assets to deliver new mixed tenure housing solutions including private sale, build to rent, student accommodation and later living solutions

House price change (%pa)

Rental value forecasts (%pa)

Source: JLL

Manchester

Some areas of Manchester will see price falls and some areas which will see price rises as demand for living in big cities recalibrates post-COVID.

This will result in house prices being flat in 2021 before growing strongly from 2022 onwards.

There is a limited availability of new homes to purchase in Manchester underpinning values.

House price change (%pa)

Rental value forecasts (%pa)

Source: JLL

Houses in the £2m to £5m range have been significantly outperforming the rest of the market. 

At the start of 2021, new properties coming to the markets fell 15% compared with January 2020 and were 22% lower than the previous five-year average (2015 to 2019) too.

As well as fewer new instructions, properties going under offer dropped in January too. January 2021 saw 5% fewer properties go under offer than in January 2020. But the impact of a strong January market last year is at play here too. Indeed, the number of homes put under offer in January 2021 was higher than in January 2017, 2018 or 2019. Each of the last six months of 2020 recorded an annual increase in properties going under offer. These deals have now progressed to the point of exchange, which means we are beginning to see a rise in sales volumes. The number of homes sold in January 2021 was up 4% on January 2020 and 3% higher than the average number of January sales between 2015 and 2019.

Over the last three months (November to January) achieved prices rose 1.8% compared with the same period a year earlier. Taking January in isolation shows a similar increase, up 1.6% in January 2021 compared with January 2020. Houses continue to see higher annual increases in prices than flats. Flats sold in the last three months (November to January) saw achieved prices rise 0.4% compared with the same period a year earlier, this compares to a 5.2% increase for houses.