Sales of homes in London valued between £5m and £10m have jumped by 78.9 per cent in the six months to November 2020, compared to the same period last year.

The latest data from Frank Knight shows that prime outer London continued to outpace prime central London in the final months of 2020.  This has been fuelled by demand for space and greenery after the two national lockdowns.

Knight Frank head of UK residential research Tom Bill says: “This increase underlines how the market is not simply responding to a stamp duty holiday, the effect of which is negligible in this price bracket.

“Instead, it reflects growing demand for houses, which tend to be more numerous in this price bracket and more in-demand among domestic buyers.

“It is also a result of how far prices have fallen in recent years due to tax changes and political uncertainty, which had a more marked impact in higher-value markets.

“Average prices between £5m and £10m fell 8.8 per cent in the two years to November, the largest fall of any price band.”

Average prices increased 1.6 per cent between June and November in prime outer London, which includes areas like Wandsworth, Belsize Park and Chiswick. Prices fell 0.1 per cent over the same period in prime central London.

Knight Frank forecasts 4 per cent growth in PCL next year and 5 per cent in POL on the basis that any economic fallout from the pandemic will be more limited in prime markets.

There was no notable impact on prices during the second national lockdown as there was during the first.

Following quarterly declines of more than 3 per cent in April and March, the decrease in the 12 months to November was 3.3 per cent in POL and 4.3 per cent in PCL.

Bill comments: “Overall, the relatively muted price performance in all areas since the market re-opened in May underscores how the release of pent-up demand has been balanced by fragile sentiment surrounding the UK economy.

“Prices in PCL have also been kept in check by international travel restrictions.”

Lettings

Average rental values continue to fall in prime areas of the capital in the final quarter of 2020, pushed down by high levels of supply. But activity levels remain well above the five-year average.

The decline in average rents was 10.5 per cent in prime central London in the year to November, while in prime outer London the fall was 9 per cent.

Bill says: “In more central areas, the combination of a glut of former short-let properties and weaker demand has driven rents lower.

“In addition, demand from international students and corporate tenants has been weaker since the pandemic.

“However, the rollout of the vaccination programme may see both travel restrictions ease and sentiment improve among international students, which could have a marked impact on demand in prime London lettings markets in 2021.”

The number of new prospective tenants registering was more than double the five-year average during October and November. Viewings were 85 per cent above the five-year average in the same period

Many tenants are moving due to a need for more space, while also taking advantage of lower rents.

The photo on the home page shows Hollybush House in Richmond on the market at the guide price of £7,750,000.