No announcement yet.

London’s luxury home prices rise record 3.1% in June


London’s luxury home prices rise record 3.1% in June

Last updated: July 16 2007
0 | Posts
3354 | Views
  • Time
  • Show
Clear All
new posts

  • London’s luxury home prices rise record 3.1% in June

    Luxury home prices in London rose at the fastest monthly rate since real estate broker Knight Frank began tracking them 31 years ago, suggesting the most expensive properties remain resilient to rising interest rates.

    The average price of houses and apartments selling for at least £ 2.5 million ($5.1 million) gained 3.1% in June after May’s 2.5% increase, a monthly index compiled by London based Knight Frank showed. Prices advanced almost 35% from June 2006, the biggest annual gain since mid-1979.

    A shortage of available luxury homes has caused prices to appreciate for the past 18 months, as investment bankers and hedge fund managers look to invest record bonuses. They have been competing with wealthy individuals from Russia and Middle East, attracted to London for its amenities and favorable tax treatment. Much of this growth is concentrated in the very upper ends of the market. It is predicted that luxury home prices will gain 25%, rather than 20%.

    Brothers Sri and Gopi Hinduja, who own the Hinduja Group with a sibling, last year paid £58 million for a 60-room home on The Mall, the avenue which runs from Trafalgar Square to Buckingham Palace, according to the Sunday Times. The surge in value of the most expensive properties is in contrast to the rest of the British property market, which has shown signs of cooling after five interest-rate increases by the Bank of England since the start of August.

    UK house prices rose at the slowest pace in almost 1 1/2 years, in June, as five Bank of England interest rate increases lifted borrowing costs and deterred potential buyers, the Royal Institute of Chartered Surveyors said Thursday. The mainstream London market is slowing unquestionably from interest rate increases. The super prime market has now detached itself from the rest of the prime market and there is no slowing of prices.

    Properties priced at more than £4 million rose 43% from June 2006, while homes selling for less than £1 million gained just 1.6% in the 12 months. The average price of a luxury house in Knight Frank’s monthly index, which draws from seven of London’s most expensive districts, is now about £5 million, with apartments costing £2.5 million.

    A typical house has gained in value by at least £1,00,000, about four times the average annual UK wage, each month since September. A house which cost £1,00,000 at the time the survey began in 1976 would be worth £4.32 million today. Monthly gains in the luxury house price index will probably slow to 1% for the remainder of the year. Prime properties in London sell at £2,300 a square foot, or 5% more than in Monaco. In New York, comparable homes sell for about £1,600 a square foot and in Tokyo for about £1,100, according to Knight Frank figures.

    Britain is home to about 68 billionaires, according to April’s annual survey published by the Sunday Times. Many newcomers are overseas investors from emerging economies like China, India and Russia, who have bought homes in London for business purposes as well as the attraction of its security, schools, stores, theatres and restaurants. Other London residents or home-owners include Norwegian shipping magnate John Fredriksen and Vladimir Kim, chairman of Kazakhstan’s biggest copper producer, the Sunday Times said.
    A slowdown at the upper end of the prime market will require a significant economic shock affecting both London and the global economy.

    Source- ET
    Date- 16-Jul'07
Have any questions or thoughts about this?