_KF Insight: Super-prime activity strengthens as price adjustments take effect

Prices in London’s super-prime market have re-based to the point that a growing number of buyers are deciding to transact, said Charles Penny of Knight Frank’s Super-Prime team.

In June this year, the total value of transactions above £10 million was £470 million. It was the highest figure since December 2014, the same month that a large number of high-value exchanges took place ahead of a stamp duty increase. Knight Frank originally reported a figure of £407 million for June but this figure has since been revised higher.

“We are reaching that critical point where pricing has come down to a level where there is a perception of fair value in the super-prime market,” said Charles, who has been working in the prime central London property market for seven years.

“Many buyers have been watching and waiting for a long time. They are aware of the political uncertainty of course, but for most of them the key fundamental attractions of London are as sound as ever.”

^{Above: Charles Penny of Knight Frank's Super-Prime team}

Average prices above £10 million have declined 8.4% since the market peak in September 2015, with regional variations across the capital.

Across all price brackets in prime central London, prices are down more than 9% since the last peak, a decline that more than compensates for any difference between old and new rates of stamp duty, suggesting the market has adjusted for higher transaction costs.

The most active buyers in the super-prime market are those with a need to transact, for reasons such as work relocation or schooling, said Charles, a theme discussed in more detail here.

There were seven deals above £30 million recorded in June, a figure last equaled in December 2014, a fact Charles attributes to the current strength of demand for houses in the super-prime market.

“For years now, most buyers have always sought high ceilings and lateral space and that remains the case. However, it is also true that a certain group of buyers are attracted to the fact that period houses are sometimes more affordable.”