The price of luxury homes in central London soared in October as buyers sought a safe haven from eurozone debt crisis, an estate agent said.
The value of prime central London apartments and houses increased by the most since September last year, according to Knight Frank, with prices now 12.5 per cent higher than a year earlier. Values of luxury homes at the heart of the capital had gone up by 14.2 per cent in September 2010.
Luxury home prices increased substantially last month as the head of the European Central Bank, Mario Draghi, warned the euro area was facing a recession due to the debt crisis. Meanwhile, the Royal Bank of Scotland has announced a larger than forecast fall in profit after the turmoil hit its securities unit revenue.
Property prices for the elite London market are expected to go up by just five per cent next year, before remaining relatively unchanged in 2013, Knight Frank said. Head of residential research Liam Bailey said a “much slower stage of price growth” was ahead and the firm “can’t see how you can have double-digit growth for three years on the trot”.
The London-based estate agent said prime central London prices have gone up by 38 per cent since the last housing market slump in March 2009. Prices have risen by 0.7 per cent on a monthly basis, the 12th consecutive increase. The number of luxury homes on the market has fallen by 14 per cent in the last year, Knight Frank believes, although it did not specify how many properties were available.
A number of commercial properties in expensive areas like the West End are being converted into homes to take advantage of the shortage of prime properties on the market. Green Property Ltd is turning the offices at 7 St James’s Square into luxury apartments, which may increase its value by more than £50m, according to a broker at WA Ellis.
Some 262 properties sold for more than £5m in the nine months to the end of September, a rise of 31 per cent, Savills said last month. The estate agent’s report found 65 per cent of buyers for these properties were from overseas. Russians account for 12 per cent of non-British buyers this year, up from 10 per cent in 2010, perhaps encouraged to invest money in the UK ahead of next year’s elections in the eastern European state.