70% of luxury home purchases in London are made in cash.

The premium housing market operates differently compared to the rest of the residential market, regardless of the location. The real estate consulting agency Savills reports that over 70% of luxury property purchases in London were made in cash from January to May of this year. This is an increase of 11 percentage points compared to the same period in 2022. The number of cash transactions for acquiring elite housing in the outskirts of the British capital has also risen to 35%.

This growing trend in the luxury housing market comes against the backdrop of rising mortgage rates in the UK, contributing to the resilience of London's premium real estate market. According to Moneyfacts data, the average five-year mortgage rate has already surpassed 6%.

According to Savills, buyers of luxury properties with their own capital purchased 71% of premium central London properties from January to May of this year, compared to 60% during the same period last year.

A real estate agency's research highlights the contradictions between housing prices in prestigious areas of central London, such as Mayfair, Westminster, and Marylebone, where there are more cash buyers, and prices in the outskirts, where purchases rely more on mortgages and are therefore more sensitive to interest rate increases.

Prices for properties valued over £5 million (around €5.85 million) remained stable in the second quarter of 2023 compared to the same period in 2022, with a slight decrease of 1%. Prices for luxury housing are still 3.9% higher than the levels observed before the pandemic.

At the same time, in the price range from £500,000 to £1 million (€585,300 to €1.17 million), they decreased by 2.1% compared to the previous year. Prices for homes under half a million pounds also fell by 2.5%.

Rupert de Forge, a partner at the real estate agency Knight Frank, noted that financial resources are being shifted from places like Turkey, Scandinavia, and the west coast of the USA to London.

In the outskirts of London, the share of transactions involving premium residential properties accounted for 35% of the total from January to May 2023, compared to 26% during the same period in 2022. Outside of London, the value of elite properties decreased by 3.5% compared to the previous year in the second quarter.