Sales of London’s costliest homes have reached a record number as the elite population of London has expressed an interest in investing in real estate. In the first half of the year, nearly 294 sales of houses worth 5 million euros or more, which in turn add up to a total spend of 3 billion euros on real estate according to estate agent Savills. This figure includes 89 houses that the realtors sold for over 10 million Euros.
It is worth noting that most of this investment comes from domestic buyers. The sales in the six months match the 2019 figure where 309 houses worth more than 5 million euros. Interestingly, that was the last period in recent history to remain untouched by Covid-19.
The rush to buy high-end homes presents a stark contrast to signs of an economic cooldown in the market. Analysts in the UK are predicting that the numbers of house sales will slow down once the interest rates rise and the economy faces the threat of a recession.
In the mass market, buyers are battling both a high rate of mortgage and a squeeze in their savings, both caused by inflation and increased cost of living. However, the people who are willing and capable of spending a sum of 5 Million Euros on their house would not fit the demographic profile of a mass market buyer and is less likely to be discouraged from buying the house, says Frances McDonald, a research analyst at Savills.
She adds that this end of the market is less reliant on borrowing and is less likely to be impacted by an increased cost of living or a rise in interest rates.
Half of the sales recorded in the first half of this year have occurred in a handful of wealthy neighbourhoods like Chelsea Mayfair and Nightsbridge.
People turn to property investment during a threat of recession because this market is considered safer than any other investment.