Competition for the short supply of upscale properties led to a price surge in central London last month. Across the board, though, real estate values are closing in on peak levels. Spurred by attractive rates and a vulnerable pound, foreign investment accounted for nearly half of luxury purchases in the past year, contributing to robust demand and renewed development. See the following article from Property Wire for more on this.
Luxury real estate prices in central London jumped 17% in February from a year earlier, the biggest gain in almost two years, as more buyers competed for a dwindling number of properties, according to a new report.
Overall prices have now risen by 19% in the last 10 months and are now only 10% below the market peak in March 2008, the latest index from Knight Frank shows.
Prices in central London rose 3.2% in February, the strongest rate of growth in a single month since August 2007 and in an increasing number of cases, larger houses in the £5 million plus bracket are now achieving prices at or above those achieved at the previous March 2008 peak.
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‘The market recovery in London was kick-started in March last year by low interest rates and the weak pound which drew foreign buyers to the capital. There was a definite feeling that price falls in the year to March 2009, at 24%, had created good value in London and buyers began to bid prices higher,’ said Liam Bailey, head of residential research, Knight Frank.
Indeed, the report shows that foreign demand has led the market, with 45% of £2 million plus purchases going to non-UK buyers over the past 12 months. New-build properties along the river and into Canary Wharf have been attracting sales from Asian investors with Hong Kong buyers being joined by Singaporean, Malaysian and Thailand buyers. demand from Asian investor buyers has risen 120% since this time a year ago.
‘The continuation of the growth in prices and the recent increase in the speed of such growth has been caused by a dramatic shortage of supply, with 22% fewer properties available for sale at the current time compared to normal for the time of year,’ explained Bailey.
At the same time demand has remained very strong with a significant influx of foreign purchasers meaning that purchaser applicant registrations is 30% higher now than in any comparable period for the last five years.
The report also shows that at the very top of the market there are increasing examples of properties hitting or exceeding peak prices again especially in the £5 million to £10 million sector in Mayfair, Kensington, Holland Park and Knightsbridge where supply of excellent properties is very thin and buyers are increasingly willing to pay figures above guide prices to secure the right house.
‘The impact of rising prices and strong demand is having the effect of drawing niche developers back into locations like Chelsea, Mayfair and Belgravia, after an absence of nearly 18 months. There was a 43% uplift in construction starts in Kensington and Chelsea between July and December last year,’ added Bailey.
Knight Frank recently sold a modernized property in Mayfair for near the record price of £3,700 a square foot achieved in 2007. ‘Newly refurbished properties done to the right standard are back to their peak and are in very short supply,’ said Richard Cutt, head of Knight Frank’s Mayfair office.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.