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Confidence pushes prime prices

Wednesday, July 01, 2009

Source: Catherine Deshayes

Prime residential property prices in central London rose 1.7 per cent in June, the third successive monthly increase due to an increase in confidence from wealthy real estate investors...

The most expensive sector, properties selling for £10 million and more, saw prices rise up to 1.9 per cent during June, according to the latest price index from Knight Frank. Buyers are lead by Russians, Greeks and Italians.

Overall prime prices have now risen 3.7 per cent between April and June, the strongest rate of three monthly growth since September 2007.

On an annual basis prices in this sector are now down dome 17.2 per cent but now they are moving upwards mainly due to tight supply, said Liam Bailey, head of residential research at Knight Frank.

There were 29.2 per cent fewer properties available in June this year compared to a year earlier and the number of new applicants looking to buy property has increased by 14 per cent over the same year-on-year basis. Viewing volumes are also up by seven per cent over the same period.

'The central London market recovery has continued for a third month in succession. Price rises last month were led by the £10 million plus sector which saw prices rise for the first time since the downturn began,' said Bailey.

'This is a significant shift in the market as the rises seen over the past two months had been led by the sub £1 million and the £1 to 2 million sectors. We have noted growing confidence from the wealthiest buyers in recent months - in terms of viewings and offers and this has now translated into actual sales,' he added.

The biggest growth in those buying in the £10 million plus sector over the past three months has been Russians and Europeans, especially buyers from Greece, Italy, France and Spain. Middle Eastern buyers are also increasing.

'There is some urgency from Euro zone buyers who keen to secure the benefit they are seeing from the weakness of Sterling. There is an expectation that Sterling could strengthen through the year and this is prompting negotiations to shorten as overseas buyers attempt to reach exchange of contracts as soon as possible,' explained Bailey.

'This urgency has contributed to a shortening in the time taken to sell properties. The average time between the commencement of marketing and exchange of contracts in prime central London has fallen from 71 days in April to 57 days in June,' he added.

Bailey expects the supply to remain tight over the summer with the volume of new stock expected to come to the market in July around 40 per cent lower on a year-on-year basis.

Source: www.propertywire.com