Wealthy buyers of mansions and penthouse apartments in London are finding that the pandemic isn’t throwing bargains their way.
Luxury homes that changed hands for more than $13 million in the second quarter sold at an average 95% of their asking prices, according to latest data from broker Knight Frank. That was the smallest discount since the end of 2016 as many sellers refuse to budge.
“The market has hardened because of pent-up demand and because of the shortage of supply,” said Paddy Dring, global head of prime sales at Knight Frank. “Covid has meant that people are not selling unless they have to.”
Buyers of the UK’s most expensive homes are paying close to asking price even as the luxury market struggles to recover from years of decline. The country’s overall housing market has enjoyed a post-lockdown rally since reopening in mid-May, with a gauge of price growth surging to the highest in almost two decades last month.
A total of 1.1 billion pounds was spent on high-end homes in the first eight months of 2020, according to the report. While that was an increase of 16% from the year-earlier period, the number of deals was roughly in line with last year and largely due to a first-quarter surge.
Blockbuster London deals have included developer Christian Candy’s sale of a mansion overlooking Regent’s Park for about 104 million pounds, Bloomberg reported in June. Polish billionaire Dominika Kulczyk bought a house near Harrods department store for 57.5 million pounds earlier in the year.
For now, prices for London’s priciest homes don’t look likely to fall much further, Rory Penn, head of private office at Knight Frank, said in the report. “It doesn’t appear that another 10% is about to come off overnight,” he said.
Restrictions on international travel meant that UK buyers accounted for 40% of deals for top-end London homes in the first eight months, the highest share in a decade, according to the report. Easing of these restrictions will be a key factor affecting deals in the fourth quarter.
“Large discounts are not available despite the pandemic,” said Penn. “Vendors are resilient, debt is cheap and banks are not calling in loans.”