London Sees Luxury Property Boom
Published: 2 August 2011 By MoneyHighStreet Staff Leave a Comment
The price of a luxury home in London is on the rise, while house prices across the rest of the UK remain depressed – and it’s thanks in no small part to foreign buyers.
If you’ve been trying to sell a house outside of London in the past year, there hasn’t been much to smile about. However, if you’re in the capital with a luxury home on your hands, the market has been going one way – up.
That’s the conclusion of new research by real-estate broker Knight Frank, which found that prices of central London properties worth more than £1 million soared by 10% over the past year while homes elsewhere in the UK lost 0.4% of their value over the same period.
Since March 2009, luxury homes in London’s most fashionable areas have increased in value by more than a third, leaving the average increase of just 7% for UK homes far behind.
To compile its data, Knight Frank looked at homes worth more than £1 million in a variety of high-priced London neighbourhoods including Belgravia, Chelsea and Mayfair. The average price of the homes is currently £3.7 million – and it’s foreign buyers who are driving the trend.
London is the foreign capital of choice for many, especially those from the former Soviet Union and increasingly from the Middle East. 60% of all homes priced over £2 million in London are being acquired by overseas buyers. This compares to just 15% in New York and 25% in Shanghai.
Knight Frank’s head of UK residential research, Gráinne Gilmore, said a further rise in prices could be expected this year.
Moneyhighstreet comments: “Well-heeled foreign buyers are good news for the UK economy as they bring significant amounts of money into the country – but at the same time they can price many local buyers out of the property market.
“But as the value of these luxury homes is being driven up by increased demand, it’s important for both buyers and owners to review their high net worth home insurance to make sure they’re covered for the real value of their property and also for their high value possessions.”
