As average house prices continue on their upward trajectory, Tepilo looks at the incredible rise in popularity of the million-pound apartment.
House prices have been on an upward curve since 2009, recovering strongly from the ill-effects of the global financial crisis and rising rapidly in nearly all parts of the country ever since.
In recent years house prices have sky-rocketed higher than ever as supply has failed to keep up with increased demand. This, and other variables, has led to a huge increase in the number of million pound homes in England and Wales in the last decade.
The latest research from Lloyds Private Banking has revealed that the number of million-pound apartment sales has grown nearly threefold (by 196%) since 2006, up from 1,002 sales to 2,967 in 2016.
Apartments have been by far the most popular type of prime property, outpacing the rate of growth in transactions for terraces (up by 165%) and semi-detached properties (154%). The rate of growth in million pound detached properties in the last decade has been less dramatic (88%), but still significant.
In 2016, apartments accounted for 22% of all million pound property sales in England and Wales, compared to 17% in 2006. Furthermore, between 2006 and 2016, apartments accounted for 26% of the increase of all million pound property sales in England and Wales.
As you might expect, the vast majority of million pound plus apartments are found in London, with a huge 96% of sales made in the capital. The number of apartment sales in London has also increased considerably in the last decade, rising by 193% since 2006, up from 973 to 2,853. This has coincided with a big increase in the number of luxury apartments and penthouses popping up across the capital and a rise in overseas investment from wealthy foreign buyers, as London has become one of the go-to property capitals of the world.
In 2016, million pound apartment sales accounted for 35% of all million pound sales in Greater London. Million-pound apartment sales have also risen strongly in the South East, rising from just 9 sales in 2006 to 45 in 2016, a 398% increase.
Significant increases were also witnessed in the East of England (283%) and the South West (150%). These regions, however, were starting from low bases, which is why the percentage increases sound so high. In the vast majority of cases, million pound apartments are found nearly exclusively in London.
In the North, meanwhile, only two regions recorded sales of million pound apartments in 2016 – the North East and North West. These regions, however, only saw one sale each, further highlighting the different worlds that the North of the country and London and the South East exist in when it comes to prime property.
One of London's most affluent boroughs – Kensington & Chelsea – witnessed the largest increase in the number of million-pound apartment sales in the last ten years, rising from 357 in 2006 to 731 in 2016. Overall, the Royal Borough – known for its wealth and the opulent lifestyles of its inhabitants – accounted for 25% of all million pound apartment sales in England and Wales in 2016. The majority of million pound sales in Kensington & Chelsea are now for apartments (72%), up from 40% in 2006 when terraced properties were the dominant force (accounting for 52% of sales).
Westminster has also seen a significant increase in the number of million pound apartment sales in the last decade, rising from 412 to 781. Some 82% of all million pound sales in Westminster were for apartments, the highest proportion of any borough.
Up and coming Hackney, newly desirable in recent years thanks to extensive regeneration and gentrification, has witnessed the highest increase in million pound apartment sales over the last decade, up from no sales in 2006 (when Hackney's reputation still preceded it) to 47 in 2016. Haringey, Brent, Windsor & Maidenhead and St Albans also saw rises, although not to quite the same extent.
Outside of London and its environs, million pound apartment sales in 2016 were also witnessed in the local authorities of Poole (15), home to the prestigious Sandbanks peninsula, Manchester (1) and Liverpool (1).
The most expensive apartments in the country are found in Westminster, where many politicians and peers have second homes. The average price of an apartment in Westminster is over £2 million (£2,215,073), something that is also the case in Kensington & Chelsea (£2,158,151).
Away from the capital, the most expensive apartments are located in the City of Bristol (average price of £1.8 million) and South Oxfordshire (also £1.8 million).
The number of million pound apartments has increased substantially, outpacing all other property types in the prime market, for a number of reasons, including a finite supply of land in Central London and a burgeoning population. To cater for the increased demand, developers have taken the ‘only way is up’ approach and started to focus more on apartments, which take up far less space than detached, terraced or semi-detached homes.
The number of high-value apartments shooting up in prime areas such as Knightsbridge (home to Harrods), Victoria, King's Cross and the West End has increased dramatically in recent years to meet rising demand, while Marylebone and Mayfair have been the top two locations for luxury developments. With demand for million pound properties still high, more developments are in the pipeline – many of the new apartments springing up across the capital are aimed at the prime market.
Outside of London, there has also been an increase in the number of million pound apartments, but taken together these still only account for about 4% of the market.
What we can take from these latest findings, though, is that if a home is being purchased for more than a million pounds, it's highly likely to be an apartment, a drastic change from even ten years ago when other prime property types dominated.