Broker attributes surge to shortage of prime properties
(LONDON) Luxury-home prices in central London rose 4 per cent in the third quarter from the previous three months as buyers competed for fewer properties, Savills plc said.
Houses and apartments worth more than £1 million (S$2.3 million) in the most expensive areas fell 4.9 per cent on an annual basis, the property broker said in a statement on Friday.
The biggest quarterly increases were in the districts of Chelsea, Kensington and Belgravia in west London. The annual decline narrowed from 11.5 per cent at the end of the second quarter.
'There isn't enough property on the market in prime areas and priced attractively to satisfy demand,' said Camilla Dell, managing partner of Black Brick Property Solutions LLC, which finds and buys homes for wealthy customers. Her company, which has advised on £45 million of property deals this year, participated in closed-bid auctions for two multimillion-pound homes in London last week, she said.
The number of homes for sale is about 25 per cent less than the average for the past five years, London-based Savills estimates. Demand for luxury properties increased after values fell by about 18 per cent from the market's peak in September 2007, the broker said. The pound's weakness also made purchases cheaper for overseas buyers. Sterling slid about 20 per cent against the euro and the dollar since the peak.
The scarcity of prime real estate on the market may not last, according to Yolande Barnes, joint head of residential research at Savills.
The strongest market in two years will probably encourage more homeowners to sell. 'Prices are expected at best to level out again and may fall back,' Ms Barnes said. The rate of unemployment and how quickly the economy emerges from recession will be critical, she said.
Knight Frank LLP said in a separate report that luxury-home prices gained 1.3 per cent in September from August. They dropped 8.9 per cent from a year earlier, the smallest annual decline in 12 months.
'UK buyers have been especially keen to take advantage of low mortgage-rate costs,' said Liam Bailey, head of residential research at Knight Frank. 'The real test in the market will come when interest rates rise.'
The UK housing market as a whole may also be stabilising, according to a survey published by the Royal Institution of Chartered Surveyors on Sept 15. The number of respondents saying prices increased in August exceeded those reporting declines by 11 percentage points, the first positive reading since July 2007.
Home prices in England and Wales rose 4.9 per cent from March through July, according to figures compiled by the Land Registry, lifting the average value to £196,338.
A rebound is also beginning for what Savills describes as ultra-prime properties that cost an average of £15 million. Prices for those homes gained 0.9 per cent in the third quarter from the previous three months, Savills said.
Brian D'Arcy Clark, head of Savills's private office unit, advised the owners of 96 Cheyne Walk in Chelsea a year ago to delay selling the 12,770-square- foot house overlooking the River Thames.
The week, he will start marketing the home, a former residence of painter James Whistler. Parts of it date back to 1670. The asking price - £25 million - includes six bedrooms, separate accommodations for guests or staff, and off- street parking for eight cars. 'For an estate agent to advise a client not to do a deal is unusual,' Mr D'Arcy Clark said. The move to sell 'is an indication of our confidence.'
The biggest price jumps among the city's prime residential markets occurred in south-west London in the third quarter, according to the broker.
Prices in districts such as Fulham, Clapham, Wandsworth and Richmond, which range from £500,000 to £2 million, climbed 8.4 per cent from the previous three months.
Values in these areas fell almost 26 per cent from the peak of the market to the end of March, triggering purchases from owner-occupiers who don't require large mortgages, said Lucian Cook, a research director at Savills. Prices rose 6.4 per cent in the second quarter from the previous three months. -- Bloomberg
Source: Business Times, 29 Sep 2009