High-end home buyers are opting for bigger homes in the wake of the Coronavirus pandemic and paying more for them, while transactions and the price paid for flats has fallen.
The latest research by high-net-worth (HNW) mortgage broker, Enness Global, analysed property sales by property type at £5 million and over across England and Wales, looking at the average sold price and what percentage of total transactions each property type accounted for.
The research shows that in the months leading up to lockdown, detached homes accounted for just 17 percent of total transactions above £5 million, while flats accounted for a notable 43 percent of all transactions.
At the same time, the average house price for all properties sold at £5 million and over was £7.15 million. However, flats were selling for above-average (£7.325 million), while detached homes were selling for below average (£6.9 million).
But lockdown restrictions have caused a swing in the buying trends of the super-wealthy.
Since lockdown started on 23rd March, overall transactions above £5 million have understandably fallen by -65 percent. Still, detached home sales have seen the smallest decline of all property types, down by just -38 percent compared to an -83 percent reduction in the sale of flats.
However, those transactions that have completed demonstrate a clear swing in the appetite of super-rich home buyers when it comes to property type.
Detached property transactions above £5 million have accounted for 29 percent of all transactions; a 16 percent increase. Flats, on the other hand, have accounted for just 20 percent of all transactions; a -23 percent reduction.
What’s more, the average price paid for detached homes has increased by 16 percent to £8 million, while the price paid for flats has fallen by -23 percent to £5.65 million. In fact, detached homes are the only property type to see an increase in the average sold price since lockdown.
Despite this, detached home high-end buyers are still securing better value, with the average price paid per square foot currently £6,405 compared to £8,626 for the average flat, although the good news for sellers is that detached homes are the only property type to see an increase in the price paid per square foot.
Group CEO of Enness Global Mortgages, Islay Robinson, commented: “Traditionally, buyers at the very top end of the market would snap up flats left-right and centre for a number of reasons.
“Many already have a primary residence, and so they purchase flats as additional homes to provide the convenience of a central location in their chosen city.
“They always want a great view, as well as the additional amenities such as a concierge, cleaning service and so on, with some also buying with rental potential in mind. All of these factors make for a very low maintenance investment with maximum benefit.
“As a result, sold prices for high-end flats have eclipsed other property types consistently, but this has all changed with the current pandemic. Now, buyers at the very top end want safety, security, privacy and, most importantly, more space.
“This has caused a complete turn around in terms of which property types are selling and what they’re selling for, with detached homes now driving the prime property market forward on both fronts.”
Mr Robinson added that while a detached house will cost more in current market conditions, they still represent better value when it comes to the price paid per square foot and that although restrictions have eased, the threat of the current pandemic “continues to linger and so we expect this trend to intensify as time goes on.”