What's Up: Central London luxury home values will jump 6 per cent this year, Knight Frank said, revising an estimate that prices would be little changed as a weakening pound made the market more attractive to overseas buyers.
Weak sterling boosts London luxury homes
Central London luxury home values will jump 6 per cent this year, Knight Frank said, revising an estimate that prices would be little changed as a weakening pound made the market more attractive to overseas buyers.
The average price of a house or apartment in the city's most expensive neighbourhoods has climbed 4.2 per cent this year and interest among prospective buyers remains strong, the London-based broker said in a report yesterday. The pound fell about 5 per cent against the euro in the first half and lost 7.9 per cent against the Chinese yuan.
The currency's weakness "helped to boost overseas interest and domestic demand has been aided by London's economic recovery", Knight Frank said.
Foreign investors are buying London properties to preserve wealth as political and economic turmoil menace their home markets, leading prices in the city to rise more than brokers had expected.
Knight Frank, along with Jones Lang LaSalle and Savills, last year forecast that prices would be little changed this year after an 8.7 per cent increase in 2012.
Knight Frank last month said it did not expect a significant increase in luxury London home values for the whole of this year. Values rose in June by the smallest annual amount since at least December 2009, the broker said.
London luxury home prices increased by 0.5 per cent in July from the previous month, bringing the gain for the past 12 months to 7 per cent, Knight Frank said. The strongest increase was for homes costing less than £1 million. Property prices in prime central London locations are now almost 60 per cent above their low during the financial crisis in March 2009, Knight Frank said.
Other factors affecting luxury values include government measures aimed at helping Britons enter the housing market by encouraging sales of newly built property and providing guarantees for borrowers with smaller deposits. While the government's Help-to-Buy programme is aimed at mainstream customers, housing market sentiment is "infectious across markets", the broker said.
UK house price growth slowed this month as more Britons offered their property for sale and demand cooled, said Hometrack.
Average values in England and Wales increased 0.3 per cent after a 0.4 per cent gain in June, said the property researcher. From a year earlier, prices were up 1.3 per cent, the most since 2010.
The average value of luxury homes in central London surpassed £2 million for the first time in the second quarter, according to the broker Marsh & Parsons.
* Bloomberg News