London Residential – Q4 2021
The return of foreign buyers, workers and students to central London seen in Q3 continued to be a main factor in the final months of the year.
London’s super prime market has led the way, recording its strongest quarter since Q2 2014 with the number of transactions up 37% from Q3. Savills prime sales index for Q4 revealed that the price of a 6 bedroom plus house in west London rose by 10.4% on the year and 15.1% since March 2020. This performance is particularly impressive considering that the international market was largely on pause for the final few weeks of the year due to Omicron.
Although the growth story is less impressive below the super prime threshold of £5m, it is no surprise that UHNWIs have been the first with the flexibility to return to the buyers’ market and we expect similar levels of success across Prime Central London once Covid-19 disruption has subsided for good.
This is already apparent in the rental market, with prime London values up 6.6% on the year in December 2021 and Q4 recording the strongest quarterly growth in eleven years. Similar rates of growth are expected for 2022 and this will inevitably draw more buy-to-let investors back to the capital. Rental growth for the commuter belt was more subdued at 2% on the quarter, but it saw an 8.1% increase in the year and there remains a severe lack of appropriate stock in some of the best-connected locations such as Weybridge and Cobham.
Notwithstanding the threat of further rate hikes, we expect pent up demand for central space to carry through well into 2022 which will likely have a positive knock-on effect on commuter and Prime Outer London.
https://www.savills.co.uk/insight-and-opinion/savills-news/323317-0/decade-high-rental-growth-in-closing-months-of-2021-as-renters-return-to-prime-london-market
https://www.savills.co.uk/research_articles/229130/323909-0/prime-london-house-prices—q4-2021
https://www.knightfrank.com/london-report