The pool of UK homes worth between £10 million (about $16.4 miilion) and £15 million has plummeted 30 per cent to 256 over the last year as wealthy home-owners remain cautious, according to research commissioned by Investec Specialist Private Bank.

According to the research, the number of luxury homes worth over £15 million shrank by 5.6 per cent to 117, and those valued between £4 million and £5 million dropped by 9 per cent over the 12 months to the second quarter of 2011. However, the more affordable end of the market was flooded with new stock. The pool of homes worth between £1 million and £3 million soared by over 12 per cent in the year to Q2 2011. Overall, according to the research, UK homes worth more than £1 million grew by 10 per cent to 21, 319, bolstered by sellers at the lower end of the market.

Of the ten UK regions that have the highest number of million pound plus properties, nine saw an increase in the number of £1 million plus homes for sale.  Both Kent and Hampshire saw increases of 42 per cent. Only London saw a decline of 1 per cent, but the research showed that 44.5 per cent of the multi-million pound homes on the market during Q2 of this year were in the capital.

Andrew Smith, research director at consultant PrimeLocation.com which carried out the survey, said that as good London stock grows scarce, foreign real estate investment is no longer being restricted to the capital.

He added: “In an environment of restricted mortgage funding, London’s residential market has been partially supported by international buyers, ensuring that £1 million-plus properties have continued to sell.  Whilst this research confirms the dominance of London in this sector, it is interesting to see the stock growth being driven by the other counties. 

“The profile of the prime stock outside of London continues to change, with 43 per cent of £1 million-plus properties being new to the market in Q2. Over the coming months, higher levels of mortgage funding will be vital to keep this market ticking over, especially within the £1 million to £3 million price bracket.”

London is increasingly being viewed as a safe haven for assets. Spooked by the eurozone debt crisis and global socio-political turmoil, high net worth individuals are looking to invest in prime London property as a wealth shelter.

“In the last month our offices have seen more interest from buyers from continental Europe as well as the Middle East and Asia, due to the ongoing Euro-zone crisis as well as London providing a more cosmopolitan lifestyle,” said Noel Flint, head of London residential at Knight Frank, in a report this month.

Aside from being perceived as a desirable location and an important financial centre, part of London’s appeal is down to attracting the world’s highest rents, according to Savills.

The estate agent last week released a ranking of capital values and rental growth of ten "world class" cities during the past five and a half years.

While Hong Kong was named the most expensive city to buy property, at 107 per cent above the ten-city average, London enjoys the highest rents. The survey showed that generally "old world" cities like Tokyo, London, Paris, Sydney and New York, have higher yields of 5.1 per cent on average, compared with 3.6 per cent in "new world" cities of Shanghai, Singapore, Moscow, Hong Kong and Mumbai.

Savills analysts said this was because the debt-induced crisis of 2008 was suffered most by the old world cities and not the new world ones and the biggest old world value rebounds have been experienced in the cities most open to new world investment, notably London and Paris.