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Property prices at 30-year high By Jennifer Hill
London (Reuters): The value of the best properties in central London has risen by more than 33% in the 12 months to end-April, according to estate agent Knight Frank's prime property index. That is the fastest Knight Frank said demand had been supported by growing numbers of overseas buyers and money spent on property by City bankers. Over the past year, Belgravia and Knightsbridge have seen the strongest market, with prices surging by more than 40%. Head of residential research Liam Bailey said: "London's traditional spring market rush starts earlier and earlier every year. For the past two years, the season has opened in December rather than March, and has run on well into May. "The early part of 2007 saw an incredibly active market, with price growth totalling nearly 11.9% in the first quarter." He said, even after 18 months of strong price appreciation, the pace of growth was yet to slow and, if anything, had quickened. Price growth In the six months to end-April, monthly price growth averaged 2.8%, against 1.7% in the same period last year. "The strong performance of the top end of the market can be attributed, at least in part, to the continuing health of the City economy and the bonus season," said Bailey. "However, it is our experience that, whilst there have been growing numbers of deals completed by City workers, it is the influx of overseas buyers - European, Russian, Indian and Middle Eastern - which is the key to the substantial price growth seen in many areas of central London." Knight Frank data shows that the supply of available property fell by more than 50% in the first quarter of 2007, compared to a 17% rise last year. Looking forward, Bailey believed stock shortages would continue to buoy the market. Home information packs Higher transaction costs - stamp duty, in particular - mean people are moving less often, while the introduction of home information packs (HIPs) this summer is also likely to cause a drop in supply, he said. The controversial packs - designed to making the home-buying process more efficient, cut the number of transactions that fall through and encourage homeowners to reduce energy consumption - were due to come into force in England and Wales on 1 June, but have met fierce opposition. The HIPs have been postponed to 1 August, when they will be introduced for larger houses. HIPs are expected to cost sellers around £500 and estate agents have been reporting a rush to complete deals ahead of their introduction. The Knight Frank prime central London residential index charts the value of property at the top end of the market: flats and penthouses with an average value of £2.5 million and houses valued at close to £5 million.
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