Luxury-home prices in central London rose at the fastest pace in a year in May as the pound’s weakness encouraged overseas buyers to compete for a declining number of properties for sale, Knight Frank LLP said.
Values of houses and apartments costing an average of 3.7 million pounds ($6 million) increased 1.4 percent from the previous month, the London-based property broker said in a statement today. That’s the seventh straight increase and compares with a 1 percent gain in April.
The cost of buying homes in neighborhoods such as Knightsbridge and St. John’s Wood has climbed 33 percent since March 2009, topping the peak reached in March 2008. The number of homes for sale is 5 percent lower than a year earlier, while prospective buyers registered with Knight Frank increased 10 percent.
“For many investors and potential owner-occupiers based in fast-growing emerging countries, prices of prime central London property are actually well below the 2007 peak in their own currency terms,” said Camilla Dell, managing partner and founder of Black Brick Property Solutions LLP. Her London-based company advises luxury-home buyers in southeast England.
Since Britain’s mainstream housing market peaked in September 2007, the pound has declined 20 percent against a basket of currencies, Bank of England data show.
‘Degree of Safety’
“For international investors scouring the world for unique assets with a degree of safety that aren’t exorbitantly valued, prime central London continues to fit the bill,” Dell said. Prices are unlikely to fall soon because the shortage of properties is fueling competition between purchasers, she said.
More foreign buyers are coming to London because of political and economic instability in their home countries, Knight Frank said. London’s role as a global financial center and the reputation of its universities and private schools are also attractions.
“We have a couple of Egyptian clients who are active at the moment and, with an early Ramadan this year, we’re expecting a busy June and July,” said Johnny Turnbull, managing partner of Turnbull Property. The London-based property broker acts for buyers of top-quality homes in the city.
Finding new or recently renovated homes has become harder after banks reduced their real-estate holdings and curtailed finance for development, improving the prospects of the few projects that do proceed.
One Hyde Park
Earlier this month, property entrepreneur Christian Candy’s CPC Group said it had sold 46 apartments in the One Hyde Park development for a total of 974 million pounds. CPC has agreed additional sales worth 120 million pounds. A one-bedroom duplex show apartment in the development decorated and furnished by Candy & Candy, the interior-design company owned by Christian and his brother, Nick, fetched 9.85 million pounds.
Competition is increasing for properties in need of renovation because there’s a shortage of fully-equipped homes on the market, said Stuart Bailey, who heads Knight Frank’s Belgravia office. Two of the last three homes that needed work, with prices ranging from 6.5 million pounds to 19 million pounds, sold for more than the guide price, he said.
“We had sufficient demand that we didn’t even need to do any formal marketing,” Bailey said. Just one of the 15 homes Bailey’s team sold for more than 10 million pounds in the past year went to a buyer based in the U.K., he said.
The average price of a London home advanced 0.8 percent in March from a year earlier, while values in other parts of the country dropped, according to the most recent Land Registry data. Prices in England and Wales fell 2.3 percent, the Land Registry survey showed, as lenders granted fewer mortgages and government budget cuts reduced household incomes.
Knight Frank compiles its luxury-homes index from estimated values of properties in the Mayfair, St. John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighborhoods of London.
Editors: Ross Larsen, Andrew Blackman.