There has been a significant increase in demand for London’s most expensive homes from wealthy buyers, including property investors, following last month's general election result.
Market conditions at the top end of the market are improving following a lengthy period of restricted activity partly due to higher stamp duty and Brexit uncertainty.
Knight Frank’s latest market data analysis on the prime London residential market has revealed super prime property sales in December hit their second highest monthly level in five years.
Liam Bailey, global head of research at Knight Frank, commented: “The luxury residential market in London has seen a significant bounce in demand - as some of the political uncertainty which dogged the market in 2019 has been replaced following the election of the first government with a workable majority in nearly a decade.
“So strong has this uptick been that Knight Frank data reveals that the number of exchanges in prime central London in December was the second highest monthly total since April 2014 - with this activity driven by a sharp uptick following the election result.”
Rental price growth in prime London looks set to pick up to hit an annual rate of about 2% over the next five years, according to Knight Frank.
The company forecasts cumulative rental value growth of 11% in prime outer London and 10% in prime central London over the next five years, supported in part by greater tenant demand and reduced levels of housing stock.
Greater private investment and public spending are likely to stimulate tenant demand as the economy strengthens but Knight Frank predicts that there will also be downward pressure on supply as more meaningful house price inflation returns to the sales market, prompting more owners to sell.
The lack of supply is expected to have a more marked impact in lower-value rental markets.