London Luxury-Home Prices Rebounded in 2009 as Supply Dwindled
Luxury-home prices in central London rebounded last year as wealthy buyers competed for a dwindling number of homes for sale, Savills Plc said.
The average value of houses and apartments costing more than 1 million pounds ($1.6 million) rose 8.8 percent, the London-based property broker said in a report today. Prices are still 13 percent lower than at the market’s peak in the third quarter of 2007, Savills said.
“Every time we sell something, it’s not been replenished, so the cupboard is pretty bare,” said Noel De Keyzer, head of Savills’ office on Sloane Street in Chelsea.
Record-low mortgage rates eased the pressure on owners to put their homes on the market, while the pound’s weakness made purchases attractive to overseas buyers. A year ago, Savills forecast a 14 percent decline for 2009 after prices fell 18 percent during the previous 12 months.
Prime property values gained 4.6 percent in the last three months of 2009. They started to recover in the second quarter, following declines triggered by the global financial crisis, and have since climbed about 13 percent, Savills estimates.
In the previous property slump in the 1990s, “most sales were repossessions, but that’s completely not happening today,” said Keyzer, who’s been selling homes for 27 years.
Luxury homes recovered more quickly than the housing market as a whole. Average home prices in the U.K. rose 0.6 percent in November from a year earlier, according to government figures published on Jan. 12.
‘Silly Prices’
“We’ve seen prices moving since the summer and have been anxious to invest,” said Naomi Heaton, chief executive officer of London Central Portfolio Ltd. “Some prices have been silly and we have had to withdraw,” she said.
LCP manages 300 million pounds of rental properties acquired for customers in the city’s priciest boroughs: Westminster, and Kensington and Chelsea. The company is raising money for a 23 million-pound recovery fund to invest in luxury properties in the U.K. capital.
Earlier this month, Keyzer advised on the sale of a 3,500 square-foot (325 square-meter) house in the central London neighborhood of Knightsbridge for 6.25 million pounds. The five- story home, which needs to be refurbished, was bought by a Hong Kong-based investor who beat nine other bidders.
The market’s recovery may not be sustainable, according to Yolande Barnes, head of residential research at Savills. Values of prime homes will probably fall 1 percent this year, she said in the report, reiterating a November forecast predicting that prices won’t return to peak levels until 2012.
Tax on Bonuses
A government plan to raise the amount of tax paid on bankers’ 2009 bonuses will increase the likelihood of a slowdown, she said. About 300,000 workers are employed in financial services in London and these bonus-earners account for about 50 percent of buyers in the prime residential market.
“Uncertainty over bonus payouts this year may well depress the spring market at a time when it would otherwise be boosted,” Barnes said.
Houses in Chelsea, Mayfair, Knightsbridge and South Kensington appreciated by 128 percent in the past ten years, more than other parts of central London, Savills estimates. Prices of apartments in the same neighborhoods rose just 40 percent.
Savills predicted that the best-performing property type in the next decade may be houses in Hampstead, Highgate, St. John’s Wood and Primrose Hill, where values are only 7 percent below their peak because bonus money accounted for less of the price increases.
“The sheer rarity of houses in a global capital city will ensure that this type continues to appreciate ahead of flats,” Barnes said.
DISCLAIMER: Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. we assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Luxury-home prices in central London rebounded last year as wealthy buyers competed for a dwindling number of homes for sale, Savills Plc said.
The average value of houses and apartments costing more than 1 million pounds ($1.6 million) rose 8.8 percent, the London-based property broker said in a report today. Prices are still 13 percent lower than at the market’s peak in the third quarter of 2007, Savills said.
“Every time we sell something, it’s not been replenished, so the cupboard is pretty bare,” said Noel De Keyzer, head of Savills’ office on Sloane Street in Chelsea.
Record-low mortgage rates eased the pressure on owners to put their homes on the market, while the pound’s weakness made purchases attractive to overseas buyers. A year ago, Savills forecast a 14 percent decline for 2009 after prices fell 18 percent during the previous 12 months.
Prime property values gained 4.6 percent in the last three months of 2009. They started to recover in the second quarter, following declines triggered by the global financial crisis, and have since climbed about 13 percent, Savills estimates.
In the previous property slump in the 1990s, “most sales were repossessions, but that’s completely not happening today,” said Keyzer, who’s been selling homes for 27 years.
Luxury homes recovered more quickly than the housing market as a whole. Average home prices in the U.K. rose 0.6 percent in November from a year earlier, according to government figures published on Jan. 12.
‘Silly Prices’
“We’ve seen prices moving since the summer and have been anxious to invest,” said Naomi Heaton, chief executive officer of London Central Portfolio Ltd. “Some prices have been silly and we have had to withdraw,” she said.
LCP manages 300 million pounds of rental properties acquired for customers in the city’s priciest boroughs: Westminster, and Kensington and Chelsea. The company is raising money for a 23 million-pound recovery fund to invest in luxury properties in the U.K. capital.
Earlier this month, Keyzer advised on the sale of a 3,500 square-foot (325 square-meter) house in the central London neighborhood of Knightsbridge for 6.25 million pounds. The five- story home, which needs to be refurbished, was bought by a Hong Kong-based investor who beat nine other bidders.
The market’s recovery may not be sustainable, according to Yolande Barnes, head of residential research at Savills. Values of prime homes will probably fall 1 percent this year, she said in the report, reiterating a November forecast predicting that prices won’t return to peak levels until 2012.
Tax on Bonuses
A government plan to raise the amount of tax paid on bankers’ 2009 bonuses will increase the likelihood of a slowdown, she said. About 300,000 workers are employed in financial services in London and these bonus-earners account for about 50 percent of buyers in the prime residential market.
“Uncertainty over bonus payouts this year may well depress the spring market at a time when it would otherwise be boosted,” Barnes said.
Houses in Chelsea, Mayfair, Knightsbridge and South Kensington appreciated by 128 percent in the past ten years, more than other parts of central London, Savills estimates. Prices of apartments in the same neighborhoods rose just 40 percent.
Savills predicted that the best-performing property type in the next decade may be houses in Hampstead, Highgate, St. John’s Wood and Primrose Hill, where values are only 7 percent below their peak because bonus money accounted for less of the price increases.
“The sheer rarity of houses in a global capital city will ensure that this type continues to appreciate ahead of flats,” Barnes said.
DISCLAIMER: Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. we assumes no responsibility or liability from gains or losses incurred by the information herein contained.
